Westpac Banking Corp (ASX: WBC) shares are rallying along with the rest of the market amid news the bank will close its RAMS home loans business to new customers.
Westpac shares are $28.01 apiece, up 1.19% at the time of writing. Meantime, the S&P/ASX 200 Index (ASX: XJO) is bouncing back after yesterday's wipeout, with stocks up 0.55% or 42 points.
Let's take a look at Westpac's announcement about RAMS.
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Westpac shares lift on news of RAMS shutdown
Westpac has announced it is closing its RAMs home loans business to new customers but will retain the existing mortgage portfolio. The portfolio was last valued at $31.8 billion on 30 June.
RAMS is a household name with its woolly sheep mascot, Raymond, a prominent feature in its marketing.
Following a strategic review of the RAMS Financial Group business, Westpac has concluded that closing RAMs to new customers is the best path forward and "will further simplify" its business.
Existing RAMS home loans will remain in place, and Westpac will contact customers whose loans are undergoing assessment.
Westpac Managing Director Mortgages, Mr Damien MacRae, said:
We have delivered considerable portfolio simplification over recent years, and after a thorough review, have decided that offering home loans through RAMS franchisees is not right for Westpac.
MacRae added that the bank was "providing franchisees with mutually agreed support and there will be ongoing opportunities for RAMS employees within Westpac".
Westpac said the decision would not have a material impact on its financial results for the year ending 30 September.
On the RAMS website, Westpac said local RAMS Home Loan Centres would be closing soon.
The bank said customers could manage their loan and deposit accounts via the myRAMS app and RAMS website. They could also call the RAMS call centre on 13 7267.
According to reporting in the Australian Financial Review (AFR), Westpac tried to sell RAMs earlier this year but was unsuccessful.
Meantime, the Australian Investments and Securities Commission (ASIC) is reportedly investigating whether RAMS mortgage brokerage franchisees failed to adhere to credit rules over a four-year period.
The Big Four bank owns several consumer brands including Westpac, St. George, BankSA, Bank of Melbourne and RAMS.
Westpac share price snapshot
Westpac shares are up 21% in the year to date and up 28% over the past 12 months.
Most ASX 200 bank shares have risen over this time period.
Commonwealth Bank of Australia (ASX: CBA) recently overtook mining behemoth BHP Group Ltd (ASX: BHP) as Australia's largest listed company by market capitalisation.
