‘CBA and Westpac are too big’: One fund manager’s take on the future of ASX 200 bank shares

A woman holds a tape measure against a wall painted with the word BIG, indicating a surge in gowth shares

A woman holds a tape measure against a wall painted with the word BIG, indicating a surge in gowth shares

With the blockbuster news out this week regarding Australia and New Zealand Banking Group Ltd (ASX: ANZ), the future of the ASX banking sector — and bank shares — is certainly in the spotlight. ANZ announced on Monday that it would be buying the banking arm of Suncorp Group Ltd (ASX: SUN) for a sum of $4.9 billion.

It will be one of the largest banking tie-ups on the ASX for decades. Certainly since the old St George Bank was swallowed up by Westpac Banking Corp (ASX: WBC) back in 2008.

So what does this mean for the future of the ASX banking sector? Could even more mergers be on the table for some of the other ASX bank shares?

Could AMP be the next big four bank takeover target?

Well, an arguable candidate for a takeover might be AMP Ltd (ASX: AMP). AMP has leaned back into focusing on its banking division after years of corporate trouble. The AMP share price has fallen more than 80% over the past five years. Not to mention this once-venerable ASX institution now has a market capitalisation of just over $3 billion. As such, AMP could certainly be in the sights of one of the ASX’s larger banks.

The question of whether AMP might be next off the rank after Suncorp was raised at the recent ‘Allan Gray Live: What does the future hold for AMP?’ webinar, hosted by ASX fund manager Allan Gray.

Expert: CBA, Westpac too big to buy AMP

Here’s some of what Allan Gray portfolio managing director and chief investment officer Simon Mawhinney had to say when asked if he thought AMP was an ASX big four takeover target:

I would say there’s less chance of it [AMP] being taken over by a big four bank than perhaps it merging with a non big four regional bank. If I think about it, I think CBA and Westpac are too big. And so the ACCC would likely have some concerns; maybe even APRA if its mandate is to be concerned about things like that.

Clearly, ANZ has now shot its bullets and it’s got some stuff to work on, and so its focus is elsewhere. NAB has recently bought Citi’s… one of Citi’s books — and so I think that they’re pretty much spoken for.

Sure, there is some scope to merge with another bank. It might happen. I hope that if someone came to AMP and said, ‘Here’s 1.3 times NTA for AMP Bank, do you want it or not?’ I hope they would take it because we would be delighted with that outcome.

So according to Mawhinney, there is far more of a chance that AMP might join forces with a bank like Bendigo and Adelaide Bank Ltd (ASX: BEN) than with the likes of Commonwealth Bank of Australia (ASX: CBA), Westpac, or National Australia Bank Ltd (ASX: NAB).

It’s an interesting take on the future of the ASX 200’s banking sector. For now, we can only wait and see what actually happens.

The post ‘CBA and Westpac are too big’: One fund manager’s take on the future of ASX 200 bank shares appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/wjnoGfX

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s