Banks to dominate
Westpac Financial Services has predicted banks will dominate the margin lending market within three years.
Westpac Financial Services has predicted banks will dominate the margin lending market within three years.
At a launch for its own margin lending product, head of retail financial serv-ices Michael Migro said banking groups with large client bases would become the new players in this market, though "investment banks and stockbrokers will still have a role to play".
"Inside of three years, the largest provider of margin lending will be a bank," Migro says.
Westpac Financial Services' new lending product is targeted specifically to the lower to mid-end of the market. The minimum investment is $20,000 with a 10 per cent buffer zone and loan to value ratio of up to 70 per cent. Customers choose their investments from a list of 400 approved securities, including managed funds.
The new product mirrors the approach taken by discount lender Commonwealth Secu-rities, which has successfully targeted the lower end of the market. Tradition-ally, margin lenders have concentrated their efforts on winning over the high-net-worth client, something Westpac's private banking division is doing with their year-old margin lending product.
Current interest rates ranged from 7.45 to 8.8 per cent per annum. Crawford also said there was no establishment fee on the product, with the first 30 transac-tions being free.
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