NAB acquires Challenger's mortgage management business

In order to grab a greater slice of the Australian home loan market, National Australia Bank (NAB) is buying Challenger Financial Services Ltd.'s mortgage management business for A$385 million ($318 million).

In a statement to the Australian Securities Exchange today, the bank said it is buying Challenger's PLAN, Choice and FAST mortgage aggregator businesses and its multi-brand 'white label' product capability.

In addition, a select portfolio of approximately $4 billion of residential mortgages will be acquired at a discount to face value for loan loss provisions.

''The purchase also includes an interest of approximately 17.5 per cent in Homeloans Ltd, with the potential to increase to approximately 41 per cent subject to Homeloans Ltd shareholder approval,'' the statement added.

"As I have said previously, we will take advantage of compelling opportunities to enhance our organic growth capabilities," NAB chief executive Cameron Clyne said, adding that the acquisition provides additional distribution and capability in Australian mortgages.

''Challenger has built an impressive business with a national network of around 5,700 brokers. As part of NAB, the Challenger mortgage management business will have the capacity to grow and support its broker networks,'' NAB Personal Banking Group executive, Lisa Gray said.