Banking alliance to challenge Big Four
By
BN
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5/07/2010 5:04:00 AM
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3
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Virgin Money and Citibank are set to launch a new retail bank that will challenge the tight grip Australia's Big Four banks have on the mortgage market.
The Australian Financial Review reports that Virgin and Citibank have committed to a 10-year deal that unites them in providing retail banking products, including mortgages.
Other products to be offered by the new bank will inlclude savings products, credit cards and transactional banking services.
Virgin Money Australia head Matt Baxby told the AFR the "competetive environment is ripe" for a challenger to the Big Four, which he said write more than 80% of home loans.
Baxby said he has received good signs from the Government, due to ongoing competition concerns following the banking consolidation during the financial crisis.
Citibank will leverage its banking licence and balance sheet as part of the deal, while Virgin will be in charge of product development and the customer experience.
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Country Broker on
05 Jul 2010 11:05 AM
HMMM, It may have an effect in the capital cities.
CitiBank will only lend in major regional cities and will not compete with the big 4 or their wholly owned regional banks for lending outside regional centres or Rural Resi lending, such as BankWest will do.
How successful it will be only time will tell, personally I hope they take market share from the big 4, it may smarten them up. Will it happen hope so.
Broker Tony on
05 Jul 2010 11:42 AM
Citibank are already in the market and provide minimal competition now - certainly in mortgages. I suspect that Virgin will be little more than a marketing arm so the increase in competition will come from a stronger presence rather than more competitive/innovative products. Pretty useless really.
Dave on
05 Jul 2010 03:18 PM
Yeah fat chance. Citibank''s latest update about new discounts is so light on information it seems the marketing people have taken over and forgot to tell the product people what''s going on. While I would love to see some further competition I can''t see either of these 2 (together or alone) ever getting it together. All they would need is to add MacBank and we would have the trifecta!!