CBA to increase its stake in Aussie Home Loans to 80%
"AUSSIE" John Symond, famous for rallying against the big banks nearly two decades ago, has netted tens of millions of dollars by selling a bigger stake of his mortgage broking business to Commonwealth Bank.
"AUSSIE" John Symond, famous for rallying against the big banks nearly two decades ago, has netted tens of millions of dollars by selling a bigger stake of his mortgage broking business to Commonwealth Bank.CBA, the nation's biggest bank, is set to increase its holding in Aussie Home Loans to 80 per cent.The banking major already owned a third of Aussie Home Loans, buying into the mortgage broker at the height of the global financial crisis.The sale was for an undisclosed amount, but BusinessDay believes the deal cost CBA in excess of $160 million.CBA declined to comment, but said the price tag - which also gives it an option to move to 100 per cent - was not material to earnings.Mr Symond will continue as executive chairman of Aussie and will retain the outstanding 20 per cent shareholding, while continuing to be involved in the growth and direction of the company.With the catchcry "we'll save you", Mr Symond is widely known as breaking the banks' stranglehold on the home loan market in the 1990s.Despite this, he said consumers would be oblivious to the ownership change, insisting Aussie's integrity will remain intact."Give it a month and ask the consumer in the street, they wouldn't have a clue who owns what," he said. "They just want the best deal they can get."The investment by CBA was a great opportunity for the mortgage broker to accelerate its growth, Mr Symond said.Even with the business majority owned by Commonwealth Bank, Aussie will continue to sell home loans through its panel of 18 lenders.Given CBA chief executive Ian Narev played a key role in the acquisition of the stake in Aussie Home Loans in late 2008, analysts have long speculated that he was likely to move to a full buyout, or at least lift his holdings in the business.However, banking analysts - which have valued Aussie at between $350 million and $400 million - treated the acquisition with caution, saying it would be hard to boost Aussie's profits in the face of a slowing mortgage market.Indeed the slowdown has put Aussie's earnings under pressure. Last year the business returned a profit of $32.6 million, down from $51.7 million a year earlier. The business last year had net tangible assets of $138.5 million.CBA group strategic development head Rob Jesudason said the transaction reflected the "strength and reputation" of the Aussie brand and name in the Australian mortgage market.The acquisition of the majority stake remains subject to approval from the Australian Competition and Consumer Commission.