Famous for rallying against the big banks, “Aussie” John Symond has pocketed tens of millions of dollars by selling a bigger stake of his mortgage broking business to the Commonwealth Bank (CBA).
CBA is increasing its one-third stake in Aussie Home Loans to 80 per cent ownership.
The exact details of the sale are unknown but various reports have the deal costing CBA in excess of $160 million.
With his catchcry “we’ll save you”, Mr Symond is widely acknowledged as breaking the big four bank’s complete domination of the home loan market in the 1990s.
Despite selling the majority of stake in Aussie to the nation’s largest bank, Symond says the deal will not lessen competition in the mortgage market, and the company will continue to offer mortgages with other lenders.
"It's got to increase competition because, as part of the transaction, Commonwealth Bank has agreed for the integrity of the Aussie business model to remain," said Mr Symond.
Mr Symond looks keen to ensure Aussie remains true to its founding principles and will remain as executive chairman of the company helping to manage the future direction of the business.
Morningstar's head of Australian banking research, David Ellis, agrees the deal will not necessarily lessen competition.
"It's a deal that will further strengthen Commonwealth's Bank number one market share in mortgages in Australia," he said.
"I expect that Commonwealth Bank will move to 100 per cent ownership, and it just strengthens their distribution and reach into the Australian mortgage market - so it's a positive deal, albeit a deal that's not necessarily a major deal for the Commonwealth Bank."
However, the head of campaigns at consumer group Choice, Matt Levey, is not so sure about the deal's benefits for home loan customers.
Levey says Australia's mortgage market is already too concentrated in the hands of the four major lenders.
"At face value this is not necessarily a good thing for Australian consumers," Mr Levey said.
"We've got four very large banks in Australia, four very profitable banks, who we often say don't put consumers' interests first in their pricing decisions, so any time we see those banks get bigger, consolidate, become more profitable, we don't necessarily think that's a good thing for competition in Australia at all." Mr Symond and CBA say the terms of the deal are confidential, but the transaction will not be material to the bank's financial performance.
The Australian sharemarket has opened stronger after comments from Reserve Bank Governor Glenn Stevens raised expectations …