Australia appears to be falling back on the age-old good bank/bad bank model to restructure Rams Home Loans, one of the country’s biggest casualties of the global credit crunch. Westpac Banking Corp, Australia’s fourth largest bank, is to buy the brand and branch network – in short, future mortgage origination – while leaving the existing loan book in the hands of Rams’ shareholders.

From Westpac’s point of view, snapping up a distribution channel of 90-odd stores and 50 franchises for about A$140m looks smart. The deal increases Westpac’s footprint by 10 per cent and will be operated separately, in line with the bank’s belief that the two lenders service different customers. Sure, the heady growth of previous years will taper off: the days of low funding costs, courtesy of commercial paper programmes and securitisation, are over for now. The 30 per cent plus annual loan book growth is not sustainable. But even at a national level, mortgage lending is increasing at some 10 per cent a year and Westpac should be able to flog more products through its new channel.