Commonwealth Bank of Australia set to launch offensive on UK mortgage market

The Commonwealth Bank of Australia is preparing an aggressive assault on the UK mortgage market. The bank, which is looking to expand away from its increasingly crowded home market, is in the final stages of plans to launch a range of low-cost mortgages by the end of the year.

The Commonwealth Bank of Australia is preparing an aggressive assault on the UK mortgage market. The bank, which is looking to expand away from its increasingly crowded home market, is in the final stages of plans to launch a range of low-cost mortgages by the end of the year.

The bank aims to become the largest foreign lender in the UK retail mortgage market.

CBA has already obtained the approval of the Financial Services Authority and complies with the Council of Mortgage Lenders' code. It has over 100 staff ready to launch the new products.

CBA has been linked with Bradford & Bingley, the building society which earlier this month received the go-ahead from members to proceed with plans for a £1.5bn autumn stock market flotation. Bankers say that Goldman Sachs, B&B's advisers had been touting the society around for some months but failed to find any takers because of widespread pessimism about the profits outlook for mortgage providers.

The news will unnerve the UK's existing providers who recently launched a raft of "Australian-style" mortgages, which offer customers more flexibility with repayments. Adrian Cosenza, who will lead the UK operation as head of European banking at CBA, said: "We will offer UK consumers benefits they have not experienced. It will be a genuine Australian mortgage, not an Australian-style one."

He added that CBA may uses mortgages to launch a full-scale bank in the UK. "We are not planning to be all things to all people. But if we can find ways to leverage our other product expertise we will consider it."

The bank is well placed to expand its offering. In Australia, as well as having a 25 per cent share of mortgage lending, CBA also is the leading supplier of credit cards and e-banking and online stockbroking services and has a 22 per cent share of deposits.

CBA will sell its mortgages through independent financial advisers and directly over the internet and through call centres. Mr Cosenza dismissed the possibility that IFAs will be unwilling to push the product because of the alternative direct routes, just as they do not tend to encourage customers to use the internet bank Egg.

The company is expected to set up its own website for online sales. However, it will launch a mortgage referral service with the online home seller 08004Homes.

CBA, which has had a presence in the City in corporate lending since the 1910s, is expanding its European presence and plans to generate 25 per cent of its capitalisation through overseas ventures in the long term.