ACCC worried about Aussie independence in CBA
THE competition regulator will push ahead with a review of Commonwealth Bank's move to majority ownership of Aussie Home Loans, raising questions whether the mortgage broker will remain competitive under the control of the nation's biggest bank.
As part of the review, the Australian Competition and Consumer Commission will also examine Aussie and CBA's role in mortgage distribution services, including how they provide mortgage brokers with access to a panel of lenders, and issues of technology and administrative support.
The ACCC has suggested that CBA's Finconnect business, which distributes mortgages through professional firms such as accountants and lawyers, may be a stumbling block to the deal given the extent of crossover in mortgage broking.
CBA last month outlined a plan to increase its holding in Aussie Home Loans to 80 per cent. It already owns a third of Aussie Home Loans. The sale was for an undisclosed amount, but BusinessDay believes the deal cost CBA in excess of $160 million.
The deal also gives CBA an option to move to 100 per cent, which the bank is expected to exercise by August 2018.
The ACCC will consider whether Aussie Home Loans is a "unique or a vigorous" competitor in the mortgage market and if this will change if CBA moves to majority ownership.
It will also examine whether the move to majority ownership "will increase prices or profit margins or decrease the quality of products" on offer.
The competition regulator has taken a tough view of banking acquisitions in recent years, including blocking NAB's move on wealth manager AXA Asia Pacific.
Aussie Home Loans is primarily a mortgage broking provider, with more than 900 mortgage brokers and 139 retail outlets, mostly under a franchise arrangement.
It also sells Aussie-branded retail banking products, including personal loans and credit cards.
The ACCC will take market submissions until the end of the month.
Banking analysts - who have valued Aussie at between $350 million and $400 million - have treated the planned acquisition with caution, saying it would be hard to boost Aussie's profits in the face of a slowing mortgage market.
After the deal, "Aussie" John Symond will continue as executive chairman of Aussie and will retain the outstanding 20 per cent shareholding, while continuing to be involved in the company's growth.
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