The people’s champion exits

News today that Aussie John Symonds has ceded control of the Aussie Home Loans Group to the Commonwealth Bank which has taken an 80% stake in the erstwhile people’s champion.

Business Day reports that,

Mr Symond will continue as executive chairman of Aussie and will retain the outstanding 20 per cent shareholding, while continuing to be involved in the growth and direction of the company.

“We welcome this arrangement as CBA’s increased interest in Aussie is a great opportunity for the company to further accelerate our growth. We now have the opportunity to grow by investing in our product and service offerings and will remain a strong competitor in the mortgage broking channel,” Mr Symond said.

Even with the business m
“We will continue to grow our existing external business relationships with our diverse partners and establish new relationships to ensure we continue to provide a competitive and broad choice of products and services from a diverse range of business partners and lenders to our customers,’’  Mr Symond said.ajority owned by Commonwealth Bank, Aussie will continue to sell home loans through its panel of 18 lenders.

That is Australian Banking and the Australian Economy for you – the big get bigger and the trend toward oligopoly and monopoly wins out in the end.

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  1. I must be missing something.. I thought this fat headed git was always telling about how he has been helping Aussies find better deals on their home loans for 20? years.. does this now mean that most better deals are now to be had with CBA as loan shark lender

  2. Something doesn’t sound right here.

    What would drive him to surrender 80% of his business to a bank?

    Why would a bank buy an 80% lump of real estate in this climate?

    What kind of figures were involved?

    Scooby Doo where are you!

    • As he said, it’s about growing the brand & distribution network. A 20% stake in something that might be able to grow by 10% p.a. is better than holding 50% in something that only grows by 5% p.a. (accounting for risk, opportunity cost etc).

      Bank isn’t buying real estate, it’s buying the lucrative interest rate spread that it’s making off the humble Aussie home (I mean debt) owner.

      If prices tank by 50%, then they will still come out on top. LMI covers them for the homeowners who lose their shirts on 90%+ LVR loans. The equity that they can scrape up from (debt)-owners’ other assets should more or less cover any negative equity in the home…. and presuming we don’t have a mass exodus of population the bank could then rent the properties back to the now-homeless-once-homeowner…. rental rate may fall due to supply, but yield should make up for that.

      Banks need to find ways to buy earnings growth now that wages growth has levelled out….this is as good a way as any.

      • I still don’t buy the angle, I think there’s more to come.

        LMI enteritis are woefully under capitalized according to the information in yesterdays post. Peter Frasier maintains that the average mortgage is 1.5 yrs ahead, I maintain that the average person has one tit and one bollock.

        Lets watch this play out. What happened to RAMS home loans in the end?

        • I don’t know the composition of Aussie’s loan book, but guessing it’s probably a slightly tighter, higher quality book than RAMS. And now there’s the backup $$ from CBA I would doubt Aussie (the brand) is going anywhere.

          Regardless of whether the hordes end up deep in negative equity, pride is going to be enough for the majority to keep stumping up the monthly repayments for the sake of retaining their plot of turf. Also full recourse loans mean that to allow foreclosure will see the household lose not only their home, but that shiny car, boat etc etc…. The embarrassment will lock a lot in, until that lump of debt is repaid.

          That’s my feeling anyway.

          Of course the main reason is that most punters are ridiculously bad with numbers, logic and common sense.

    • Hey Muzza,

      It is a bit smelly isn’t it? Here’s the ‘Aussie champion’ in 2010 deploring the lack of support for the non-lending sector under government reforms:

      “Aussie Home Loans founder John Symond, the man credited with pioneering Australia’s non-bank lending sector, has slammed the Government’s lending reforms as “pathetic” and says more needs to be done to support non-bank lenders.”

      And here’s the Commonwealth Bank defending ‘competition’ (despite the highest banking concentration in the world):

      “However, the man who sparked the inquiry, Commonwealth Bank boss Ralph Norris, who was the first to jack rates well above the RBA’s official rate rise in November, says the banking system remains “highly competitive” and has warned against any moves that may weaken the sector.”

      The fact is, Aussie John’s more than ample butt was largely bought up during the GFC, and the Commonwealth bank has had him on a leash since that time:

      “But Symond was forced to defend his position supporting the non-bank lenders, given he sold 33% of his business to the Commonwealth Bank in 2008.

      He insisted CBA was a passive investor. “They have no say in how I run my business.”

      So, in 4 years our ‘hero’ Aussie John (a real national living treasure that he is, along with Clive Palmer) has gone from deploring the lack of support for, and infiltration of, non-bank lenders in Australia to suddenly seeing the Commonwealth bank takeover (leviathan in the Aussie credit market) as a great thing – because it gives the Common Theft of Wealth bank another brand label to fool the sheeple with.

      Funny that. The rich get richer, competition is further undermined as the CBA further monopolises the market with it’s sibling branches (ANZ, Westpac, NAB) who are themselves largely owned by JPM, Citigroup, HSBC etc). What a great system we have.

  3. That’s one pin knocked over in the race to consolidate.

    Gotta be hard to make a living in sub-prime loan fraud when the Fed gov’s AOFM have stopped propping up your business model with new RMBS fund seeding and state government FHB grants also dry up!

  4. I hope your heading as “people’s champion” is tongue in cheek. Aussie Home loans were sharks. “Well save you”. Rubbish. They had charges for everything. I had three investment houses with them. Every single change / alteration / phone call meant you got charged by them. There was no where to go, just phone calls. You had no one to talk to, just a phone operator. If you dared to refinance or make an alteration to your loan, bang $700 fee. I know, I did it three times. Stupid.

    Then I transferred to CBA for my loans – no fees for revaluing, no fees for refinancing…it was wonderful.

    Aussie were a bunch of sharks who did not save the people anything at all. Maybe he did bring down the interest rate, but that is about it. Everything else was “we will charge you”.

    • Considering the rate has been dropping faster than a Manilla whores drawers when USS Nimitz is in port I would hand out much credit for that “achievement”

    • From what I hear “Aussie John” was also ruthless on the brokers selling his products… on TV talking about struggling Aussie’s then rampaging through his Brisbane offices telling the brokers if they didn’t force through a credit card with every mortgage he would cut off their referrals. He sounds like a 2 faced schmuck.

  5. CBA, through Aussie, now take a percentage for loans sold to their competitors. Even if they don’t get the loan they still make money.

    Also, through Aussie they will have profiles on some of the other banks customers.

  6. GunnamattaMEMBER

    Well Aussie John obviously isnt seeing much growth in the mortgage market and figures now is a decent time to sell.

    CBA have obviously found a nice way to shore up their exposure to mortgages.

    I tend to see it as a wagons in a circle move. I doubt mortgagees will see any tangible benefit.

  7. “That is Australian Banking and the Australian Economy for you – the big get bigger and the trend toward oligopoly and monopoly wins out in the end”

    No it’s just called capitalism.

    • I mean capitalism if unabated will always lead to monopolies or oligopolies. Inefficiency is inherent in capitalism.

      • But that is why we have a govt – to set and enforce wtihout favour the rules for markets.

        But as you can see from the point I made above, it seems to wholelly abdicate that responsibility in favour of a host of unimportant trivia.

        • The trivia is the positive re-inforcing loop – you deal with trivia, you get elected. You make the courageous (for “Yes Minister”-values of “courageous”) choices, you get dumped next time.. Now – your choice, sir!

  8. Watch the CBA’s share of mortgages originated by Aussie.

    We know that CBA’s investment advisers often favoured Colonial First State as Manager of Super funds of people for whom they prepared financial plans.

    Who will Aussie prefer for mortgages? I can hear it now, “Yes we can save you if you take this no frills mortgage from X but if you want Y & Z features CBA is best.”