By Eric Johnston
NATIONAL Australia Bank's planned $385 million move on Challenger's mortgage business is coming under close scrutiny from the competition regulator amid concern over the major banks' level of control over the lending market.
Under particular scrutiny will be NAB's ability to restrict other lenders from accessing Challenger's Plan, Choice and Fast broking platforms and mortgage aggregation businesses.
At the same time, the Australian Competition and Consumer Commission is asking market players whether NAB will have the ability to substantially increase its share of the home lending market through the broking network.
NAB last month outlined plans to acquire Challenger's home lending business, in a deal set to make the bank a key player among the nation's mortgage brokers.
The transaction comes against a backdrop of intense debate over the level of competition in the Australian banking market, while smaller lenders face a squeeze because of escalation in funding costs.
Together, the big four lenders are writing more than 90 per cent of the nation's new mortgages, compared with a rate of about 60 per cent before the crisis. However, analysts argue their real control on the market is closer to 100 per cent when indirect lending to non-bank lenders and mortgage brokers is factored in.
Under the deal, NAB will acquire Challenger's mortgage distribution and lending businesses along with about $4 billion of residential mortgages that are held in finance warehouses.
Although the transaction is not a bank-on-bank acquisition, ACCC chairman Graeme Samuel said the deal would come under rigorous review.
Mr Samuel noted that the pressures that existed on banks and the financial sector at the height of the global market crisis late last year did not exist today.
The ACCC is expected to finalise its view on the deal early next month.