ACCC green lights Commonwealth Bank’s Aussie takeover

Australia’s competition watchdog will not oppose the Commonwealth Bank’s acquisition of John Symond’s Aussie Home Loans.

The bank, Australia’s biggest mortgage lender, already owns a third of the mortgage broking franchise business, which it acquired in August 2008.

It proposed in December last year to lift its stake to 80% with the right to subsequently move to 100% ownership.

The remaining 20% is held by founder John Symond.

A spokesperson for Aussie said the agreement was always for the Commonwealth Bank to acquire “80% now with a transition to 100% in four years”.

“Effectively the ACCC decision has given the green light for that to happen,” the spokesperson added.

Following a two month review, the Australian Competition and Consumer Commission said in a statement it would not oppose the Commonwealth Bank of Australia’s proposed acquisition of the remaining 67% of the issued capital in Aussie Home Loans.

“In reaching its view, the ACCC took into account the competitive constraint arising from the presence of a number of alternative suppliers of home loan products and mortgage distribution services,” said ACCC chairman Rod Sims.

“While Aussie Home Loans franchisee brokers will still wish to offer home loans from a range of lenders, Commonwealth Bank is likely to have the ability and incentive to increase the volume of, for example, “white label” home loan products (financed by Commonwealth Bank and rebranded as Aussie Home Loans) supplied through the Aussie Home Loans network,” said the ACCC.

“However, the ACCC concluded that this would not give rise to a substantial lessening of competition; Aussie Home Loans brokers make up only around 6% of Australia’s mortgage brokers, and there are many other distribution channels through which lenders can access brokers and borrowers.

The ACCC said it consulted widely with a range of interested parties, including bank and non-bank lenders, mortgage aggregators, broker head groups and industry bodies in making its decision.

Aussie Home Loans operates a franchise network of around 750 mortgage broker which distribute home loan products and retail products from bank and non-bank lenders.

The ACCC said that in addition to distributing these product Aussie mortgage broker may supply “white label” products, financed by a third party lender such as Commonwealth Bank, but rebranded as own brand home loan products of Aussie Home Loans.

This article first appeared on Property Observer.

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