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Westpac Banking Corp (ASX:WBC) is seeing its shares rally following the announcement that it will be closing its RAMS home loans business to new customers. As of the latest update, Westpac's shares are trading at AU$$28.01, reflecting a 1.19% increase. This uptick comes in the wake of broader market gains, with the S&P/ASX 200 Index (ASX:XJO) bouncing back from a recent downturn, up 0.55% or 42 points.
The decision to close RAMS to new customers marks a significant shift in Westpac's strategy. The bank has decided that discontinuing RAMS' home loan offerings to new clients aligns with its goal of simplifying its business operations. Despite this closure, Westpac will continue to manage its existing mortgage portfolio, which was valued at AU$31.8 billion as of June 30.
RAMS, known for its distinctive woolly sheep mascot, Raymond, has been a staple in the Australian home loan market. However, after a comprehensive strategic review, Westpac has concluded that maintaining the RAMS franchisee model is no longer the optimal approach for its business. As a result, the bank will close local RAMS Home Loan Centres, although existing loans will remain unaffected.
For current RAMS customers, the transition will be managed with minimal disruption. They will still be able to manage their loans and deposit accounts via the myRAMS app and the RAMS website. Additionally, the RAMS call centre remains available at 13 7267 for customer support.
Westpac's decision comes amid a challenging environment for financial services. Earlier this year, the bank attempted to sell RAMS but did not find a buyer. Furthermore, there are ongoing investigations by the Australian Investments and Securities Commission (ASIC) into whether RAMS mortgage brokerage franchisees complied with credit regulations over a four-year period.
Westpac's decision to shut down RAMS to new customers represents a strategic realignment aimed at simplifying its operations and enhancing efficiency. While the closure of RAMS Home Loan Centres might affect brand visibility, the bank’s focus on existing customers and support for franchisees suggests a measured approach to managing this transition.
