THE competition and consumer watchdog says it will not stand in the way of National Australia Bank's purchase of Challenger Financial Group's mortgage management business.
The Australian Competition and Consumer Commission (ACCC) said it believes the $385 million deal was unlikely to substantially lessen competition in the home loan supply market.
"The ACCC conducted extensive analysis investigating the potential NAB might have to restrict competition from rival lenders and broker distribution platforms," it said.
Its market inquiries revealed NAB's proposed acquisition would only increase the share of the Australian home loan market by less than one per cent.
The news follows speculation last week in the UK that NAB was considering a big for the big UK insurer, Legal & General. Business commentator Stephen Bartholomeusz, who writes for Business Spectator, labelled the notion "ludicrous", noting the deal would be worth $13 billion pr more, and that it would trigger a shareholder revolt and the end of CEO Cameron Clyne's tenure.
NAB itself played down the speculations as well, saying it was only interested in "bolt-on or incremental" deals.
But it is in Australia that NAB's power is really under scrutiny, along with the other three big banks. Growing concerns about the dominance of the big four - NAB, Commonwealth Bank of Australia, ANZ Banking Group and Westpac Banking Corp - whose share of the local home loan market has reached to 90 per cent of the market. It was close to 60 per cent at the start of the global financial crisis.
But yesterday Federal Treasurer Wayne Swan allayed calls for an inquiry into competition within Australia's banking sector.