Mortgage Market Pressures Prompt Anz To 'review' Wholesaler
The Age
Wednesday June 27, 2007
THE competitive squeeze in the home loan market has led to ANZ effectively putting its stand-alone Origin wholesale mortgage business up for sale, which could prompt a bidding war among competitors.
GE Money, the Australian arm of the US finance giant and owner of mortgage lender Wizard Home Loans, has been touted as a possible buyer, along with rivals Challenger and Macquarie Bank's Puma operation, which specialises in securitised loans. Despite slim profit margins in the mortgage business, analysts indicated that Origin could fetch more than $100 million.This is because a sale could allow a competitor to bulk-up an existing operation while taking a big rival presence out of the market. ANZ said it was reviewing its "strategic options" for Origin - a coded statement for selling the business - after the bank revealed it had received unsolicited approaches from parties interested in buying it. Origin - one of the initial suppliers of finance to Aussie Home Loans, whose cheaper mortgages broke the domestic banks' hold on the sector - is a "white-label" company, meaning it is not readily identified as an ANZ-owned business. Some of its customers will be competitors of the bank. Origin, bought by ANZ from the Dutch institution Rabobank in 1998, has 40,000 customers and $7 billion worth of loans on its books. That compares with a total of $99 billion of mortgages held by ANZ.ANZ has decided to concentrate on its own branded loans, which are increasingly being sold through its expanded branch network. Origin, which employs about 50 people in Sydney, sells its loans through 25 mortgage operators in Australia and five in New Zealand. The future of the company won't be known for a few months while the bank tests the market to see if the likely bids match its internal valuation.Market watchers said Origin had become a low-margin operation for ANZ and was unlikely to be meeting growth targets.Origin is the second large home loan lender to be offered for sale over the past few months. Privately owned RAMS, which sells mortgages directly to the public, has yet to find a buyer after would-be purchasers baulked at the $1 billion price.It is now likely to be floated by its owner, John Kinghorn, in a $720 million public offering.
© 2007 The Age