“This decision comes after careful consideration, much deliberation and consultation, and a long and thorough process,” Chalmers said.

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“The proposal will allow Suncorp to focus on its insurance businesses at a time when the sector faces a range of specific challenges, including access and affordability,” Chalmers said.

Investors welcomed the ruling, which will result in ANZ becoming the third-largest mortgage lender in Australia, overtaking National Australia Bank. Suncorp shares gained 3.4 per cent to $17.36, while ANZ shares were flat at $28.29.

ANZ chief executive Shayne Elliott said the decision was a key milestone for the Melbourne-based bank’s plan to push further into Queensland’s market. Elliott said the deal would also help ANZ bulk up in retail banking, allowing it to better compete.

“Queensland is thriving. With strong economic growth, high workforce participation and more interstate migration than any other state or territory, we’re excited about the opportunities Queensland presents for ANZ and our customers,” Elliott said.

Evans and Partners analyst Azib Khan estimated the deal would improve ANZ’s earnings per share by about 2 per cent over the next three to six years, but it would also add to cost challenges facing the bank.

“We believe the acquisition will add to ANZ’s medium-term cost challenges, and that the acquisition will not significantly shift the dial in terms of ANZ’s capital allocation which sees the greatest percentage of capital being allocated to the relatively-low-ROE [return on equity] institutional division,” Khan said.

The final step needed for the acquisition to be completed is for legal changes to come into effect in Queensland. ANZ said it expected the deal would be completed by the end of July.