CBA, NAB may be selling their car loan divisions
(17 November 2017 – Australia) Following Westpac’s plans to sell off its car loan operations in 2018 via Morgan Stanley, reports suggest Commonwealth Bank (CBA) and National Australia Bank (NAB) are planning following suit.
As new regulations on dealer commissions take effect, banks will be looking to offload these units in the new year. Additionally, banks’ capital requirements under Basel 4 could prove to be a key driver to the change.
While car dealers earn a commission on new car financing they on-sell, the new regulations would mean that banks won’t have the necessary systems in place to justify having such divisions, which make returns of around five percent, with a divestment being the best option.
While CBA is thought to make about A$350 million in profits from its auto loans division, it is smaller than Westpac’s which may reap more than A$2 billion for its A$10 billion loan book.
Reports suggest that Westpac may publicly list its auto loans business and is believed to be taking time to separate the business off from the bank.
Following its purchase of ANZ’s Escanda business in 2015, Macquarie may be in prime position to acquire any auto loan operations that come up for sale.
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