The acquisition of GE Money’s home lending business, Wizard Home Loans, by National Australia Bank (NAB) is edging closer.
In an update to Wizard staff this morning GE Money Home Lending managing director Lisa Davis said the group was in the “pointy end” of discussions with NAB regarding the sale.
Davis said over the coming five to 10 days a sale agreement would be exchanged and signed, with the deal currently being finalised in a series of meetings in Melbourne.
NAB is reportedly offering more than $100 million for the brand, staff and distribution channel of Wizard, as well as part of the existing mortgage book. NAB’s previous offer of less than $100 million didn’t include any of the existing mortgage book.
The public relations teams of both NAB and Wizard are reputed to be meeting this Thursday to nut out the public statement, while the human resources teams of both groups will also be meeting this week.
Davis spoke of a settlement period of around February/March next year, with a transition period to follow. According to sources close to the matter, the only sticking part in the agreement is who will own the mortgages that are written between the announcement date of the sale and the end of the settlement period.
GE announced in May that it was considering ‘strategic options’ for Wizard, and while NAB has long been touted as the suitor, it seemed the courtship may have turned cold in recent weeks.
While Wizard was created to challenge the big banks, pressures in mortgage and credit markets have led to significant consolidation in this area, with Westpac taking a stake in Rams, CBA taking a stake in Aussie Home Loans and dealer group Count Financial taking a stake in Mortgage Choice.
GE runs its books on a calendar year basis, and as such is keen to finalise the deal before year end. It’s likely the majority of the existing book of mortgages will remain with GE, with the group retaining staff in mortgage retention areas. Meanwhile, the credit, marketing and other mortgage generation roles have been discarded.
The sale doesn’t extend to the group’s wholesale mortgage business.
Wizard has a network of almost 200 branches. In recent months the volume of Wizard mortgages written by the third party channel has reportedly dropped significantly. Wizard’s tight lending policy has made it difficult for some brokers to write Wizard business, leading them to write business from other lenders instead.
But Wizard has encouraged that practice in recent weeks by increasing the commission on loans written from other sources, with GE not keen on stumping up capital in a wound-back business in Australia when it could be put to better use elsewhere.
