The CBA is offering to pay $1200 to home loan customers who desert rival NAB. Source: AFP

Lending goliath the Commonwealth Bank has finally and emphatically joined the battle with an offer to pay $1200 to home loan customers who desert rival National Australia Bank.

And Westpac is launching an aggressive campaign to poach business customers from rival banks in a further blow to NAB, the nation's dominant business lender.

In a series of advertisements running nationwide today, Westpac is promising to pay switching fees - including stamp duty and legal costs - for business customers who spurn rivals.

The retaliatory strikes come a week after NAB unleashed the war by promising to pay mortgage exit fees of $700 for customers who switched from Westpac and CBA.

Upping the ante as it joins the fray, the CBA is also offering a further $100 to home loan customers from NAB who also switch their credit card account and open a transaction account.

Industry analysts said it was probably the most combative campaign carried out by a major bank.

"I have never seen a time when competition was so aggressive between the individual players," said Victor German, an analyst at stockbroker Nomura.

"It's quite remarkable."

In an email distributed to staff yesterday, CBA retail banking head Ross McEwan attacked NAB's campaign, saying it "just affirms our market-leading position".

"We'll use the opportunity to target their customers, who are already unhappy with their bank because of poor service, ongoing system issues and undelivered promises," he wrote.

The CBA has about one-third of the mortgage market, marginally ahead of Westpac, with NAB and ANZ each claiming about 18 per cent.

"We are determined to protect our position," Mr McEwan told the Herald Sun.

Westpac's Trudy Vonhoff said the bank's campaign to poach business customers was not levelled specifically at NAB, despite its market dominance.

"This part of the world (business lending) is starting to hot up," she said.

A NAB spokeswoman said its "competitive approach and better deal . . . has got the other banks worried".

taylorp@heraldsun.com.au