CHALLENGER LIMITED — M&A Activity 2009

Commission

NEWS RELEASE

GPO Box 3131 Canberra ACT 2601 23 Marcus Clarke Street Canberra ACT tel: (02) 6243 1111 fax: (02) 6243 1199 www.accc.gov.au

ACCC NOT TO OPPOSE NAB'S PROPOSED ACQUISITION OF CHALLENGER'S MORTGAGE MANAGEMENT BUSINESS

The Australian Competition and Consumer Commission will not oppose the proposed acquisition of Challenger's mortgage management business by National Australia Bank, after concluding that it is unlikely to substantially lessen competition in the market for the supply of home loans.

NAB proposes to acquire Challenger's broker distribution businesses of Choice, PLAN and FAST, a multi-brand "white label" lending business that provides wholesale mortgage loans to mortgage managers who in turn distribute mortgages under their own brand. NAB also proposes to acquire a portion of Challenger's residential mortgage portfolio, but not the commercial mortgages portfolio.

"In forming its conclusion that the proposed acquisition will not substantially lessen competition, the ACCC conducted a rigorous investigation involving comprehensive market inquiries with a wide range of relevant parties," ACCC chairman, Graeme Samuel, said today.

The ACCC conducted extensive analysis investigating the potential NAB might have to restrict competition from rival lenders and broker distribution platforms.

ACCC market inquiries revealed that NAB's proposed acquisition of the Challenger mortgage portfolio will only increase its share of the Australian home loan market by less than one per cent.

The acquisition will also result in NAB entering the broker distribution (mortgage aggregation) space. The Choice, PLAN and FAST broker distribution platforms provide accredited brokers access to a range of lenders' mortgage products, and administrative and technical support services. These broker distribution platforms currently have a combination of exclusive and non-exclusive relationships with approximately 40 per cent of brokers nationally. The ACCC recognised that although Challenger has a high share of affiliations, brokers have the ability to switch to alternative broker distribution platforms.

"In this instance, the ACCC concluded the ability of brokers to switch to rival distribution platforms, and competition from other lenders, would prevent the proposed acquisition from substantially lessening competition in the national market for the supply of home loans," Mr Samuel said

Media inquiries Mr Graeme Samuel, chairman, (03) 9290 1812 or 0408 335 555 Ms Lin Enright, director, media unit, (02) 6243 1108 or 0414 613 520 General inquiries Infocentre: 1300 302 502 NR 247/2009 7 October 2009