NAB to purchase Challenger / Plan

Saw the market announcement on the ASX this morning.

NAB said:
National Australia Bank today announced that it had reached agreement to purchase the mortgage management business of Challenger for $385 million.

The purchase includes PLAN, Choice and FAST mortgage aggregator businesses and Challenger's multi-brand 'white label' product capability. In addition, a select portfolio of approximately $4 billion of residential mortgages will be acquired at a discount to face value for loan loss provisions. The purchase also includes an interest in approximately 17.5% in Homeloans Ltd, with the potential to increase to approximately 41% subject to Homeloans Ltd shareholder approval.
 
Yes interestingly enough i was talking to my NAB credit manager at 9.30am and told of the ASX annoucement.

He then went into a tele conference and was told by NAB HQ of the announcement and it was to be kept in in strict confidence.

Seems they didnt realise it was released to the market at 9.20am this morning.
 
very, very bad for everyone imo

Not if you are a NAB shareholder:D
Whilst this is a relatively small, low risk and marginally accretive acquistion for NAB, it will, more importantly, boost NAB's mortgage market share upwards from its current 14.8%.

The cost is a reduction in Tier 1 capital of about 15 basis points.
 
For the most part Challenger's mortgage arm will continue to operate as a separate business unit, so business as usual.

Consolidation in the lending market on this scale is scary and generally not good for competition.

On the other hand Challenger was in financial trouble. If you do business with Challenger in some way, that business will be backed by the NAB which offers far better security than Challenger did.

Overall it's cloudy, but there is a silver lining.
 
I wonder if this will help unfreeze their mortgage funds, in which many people have had their cash stuck for nearly a year.
 
how long b4 we have 2 lenders controlling 80 % market share :)

Petrol voucher anyone ?

ta
rolf

The current situation of extreme market dominance by the big 4 WONT CONTINUE into perpetuity. There will be a gradual normalicy of market competition, but it wont be anything like the period of 2003-2007. That period is over, at least for the next 10-20 years (enough time for the next generation to forget the mistakes of the past).
 
I wonder if this will help unfreeze their mortgage funds, in which many people have had their cash stuck for nearly a year.

This situation will gradually unwind. The securitisation market is starting to work again, but again not on any levels that you have seen prior to 2008.
Pre 2008 levels wont be back for another 10-20 years.
 
I doubt it

Challenger was pretty much losing money on much of its business, hence the giveaway price. I think it will take a while for any lower cost of external financing to flow through ( on the basis that NAB may be regarded as a lower credit risk)


ta
rolf
 
Not if you are a NAB shareholder:D
Whilst this is a relatively small, low risk and marginally accretive acquistion for NAB, it will, more importantly, boost NAB's mortgage market share upwards from its current 14.8%.
The cost is a reduction in Tier 1 capital of about 15 basis points.


and also eliminate more competition. I don't see how this can be good in any way.

Also NAB shares have under preformed on average for the last seven or so years. So i guess purchasing challenger would get a NAB shareholder excited
 
and also eliminate more competition. I don't see how this can be good in any way.

Also NAB shares have under preformed on average for the last seven or so years. So i guess purchasing challenger would get a NAB shareholder excited

Yes it gets me very excited, because they are using the current uncertain times to acquire businesses at below intrinsic value.

It also gets me excited because the new CEO is aware of mistakes of the past. I much prefer an acquisition that is earnings accreditive, than persuing future 'blue skies'.

Let me give you a hint, prior to 2008, i'm sure BnB was outperforming its the averages:D
 
I'm thinking ultimately, I now have a new boss at the NAB, as probably do a lot of the MBs on the forum.

But at the same time its too early to tell what they're going to do.

I do think that this is further consolidating the position of the 'big 4'. Which the government may be supportive of considering the 'economic climate'... and when things get better globally they may re-open the market for more competition. From memory most of the NAB things I've attended, they tell you one thing and then about 20% of this comes true.

Its like when CBA said they wouldnt change broker commissions, but instead they reduce how much $ they lend out and minimum loan requirements for MBs to keep their accreditation (hence they dont pay out as much...).

IMO its a done deal, and at the end, Challenger was a crappy place to deal with for a mortgage. Theres been a few posts about how their rates were higher, slow to change, bad back office etc etc...

If people object then you can write to the ACCC, which would be more productive than on whinging about it on SS.
 
I'm thinking ultimately, I now have a new boss at the NAB, as probably do a lot of the MBs on the forum.

But at the same time its too early to tell what they're going to do.

I do think that this is further consolidating the position of the 'big 4'. Which the government may be supportive of considering the 'economic climate'... and when things get better globally they may re-open the market for more competition. From memory most of the NAB things I've attended, they tell you one thing and then about 20% of this comes true.

Its like when CBA said they wouldnt change broker commissions, but instead they reduce how much $ they lend out and minimum loan requirements for MBs to keep their accreditation (hence they dont pay out as much...).

IMO its a done deal, and at the end, Challenger was a crappy place to deal with for a mortgage. Theres been a few posts about how their rates were higher, slow to change, bad back office etc etc...

If people object then you can write to the ACCC, which would be more productive than on whinging about it on SS.

pfffffffffft

both to your post and the ACCC
 
Yes it gets me very excited, because they are using the current uncertain times to acquire businesses at below intrinsic value.

It also gets me excited because the new CEO is aware of mistakes of the past. I much prefer an acquisition that is earnings accreditive, than persuing future 'blue skies'.

Let me give you a hint, prior to 2008, i'm sure BnB was outperforming its the averages:D

why didn't you just shift your stock to WBC or CBA and avoid the mistakes in the first place :rolleyes:
 
why didn't you just shift your stock to WBC or CBA and avoid the mistakes in the first place :rolleyes:

You are assuming i held the stock for the last 7 years.
There are only two 'secrets' to long term portfolio development (easier said than done though), get the stock right and get the price right.

I only started buying into NAB on a dollar cost average basis since 2008, with an average buy in price of around $20. I'm not buying further at current market prices of $28 odd.

You are correct though in that the financial community believes that WBC/CBA are better run financial organisations. However the the price of their shares are more expensive as well(both on a profit basis and a price to book basis). I honestly dont have the skill to differentiate between them, so i just bought all 4 but at different prices and at different stages during the recent crash.
 
Last edited:
This was in the biz spectator today. Hope the link works

http://www.businessspectator.com.au...allenge-pd20090818-V24ZV?OpenDocument&src=kgb

Commentary
1:00 PM, 18 Aug 2009

Stephen Bartholomeusz

NAB's catch-up challenge

National Australia Bank kicked a few tyres during the early phase of the financial crisis but chose to stand back and watch as Westpac and Commonwealth pursued aggressive acquisition strategies. However, with those banks now writing more than 80 per cent of new home loans, Cameron Clyne has decided enough is enough....

Link continues the article
 
Top