Judo has takeover target. (AFR article).The green lighting of...

Judo has takeover target. (AFR article).

The green lighting of ANZ’s takeover over Suncorp Bank is, inevitably, prompting investment bankers and strategists inside major banks to think about what deals might be next.

For example, could Judo Bank become a target? Or Bank of Queensland’s business lending book? And would National Australia Bank be the most likely acquirer? Those questions were doing the rounds on Wednesday, as analysts and advisers turned their minds to possible future banking combinations.This comes after the Australian Competition Tribunal on Tuesday found competition from Macquarie and the growing role of brokers was putting enough pressure on the big four to allow ANZ to subsume Suncorp Bank. Could a BoQ takeover be next?

This thinking “opens the door for further smaller bank mergers,” said Citi analyst Brendan Sproules. With ANZ set to use Suncorp for a leg-up selling mortgages in Queensland, most of the speculation about the next deal centres on NAB, whose new CEO Andrew Irvine is keen to defend its prized business bank from an attack by Commonwealth Bank and Macquarie.

The most obvious target for NAB would be Judo Bank. An ASX-listed business bank with a market capitalisation of $1.4 billion, Judo reported half-on-half business loan growth of 9 per cent on Tuesday and deposit growth of 16 per cent. It has never indicated it is for sale. With hostile takeovers out of the question in the banking sector, any purchase of Judo would need to be negotiated with new CEO Chris Bayliss, who will take over from Joseph Healy next month. Still, Judo has been facing margin pressures as it refinances cheap, RBA pandemic funding, along with tough competition from the big end of town. The tribunal’s decision has put inorganic growth by acquisition back on banks’ drawing boards – especially if the target does not require complex IT system integration. What makes Judo interesting is it is self-contained. It has 133 bankers, who are managing 30 customers each, with an average loan size of $3.3 million. The quality of its credit is solid, and it is aligned with the customer-focused strategy the banks are preaching. “NAB, CBA, Westpac, and even Macquarie, would all be interested in Judo – if it went on the block,” according to one banker.