Nab Plan To Go Global, Again
Sydney Morning Herald
Monday May 21, 2007
NATIONAL Australia Bank is preparing to make its first foray overseas since writing off $4 billion five years ago following its disastrous acquisition of US mortgage lender Homeside.
With the bank restored to what analysts regard as full financial health since the subsequent foreign exchange currency dealing scandal in 2004, NAB's senior management has turned its attention to taking advantage of a growing number of international opportunities. But, unlike the $1.7 billion spent on buying into the North American home loans market in 1997, NAB is set to steer clear from buying an overseas retail banking and lending operation, an area that is fiercely competitive and that, it believes, would tie up too much capital to both acquire and develop. For that reason, it has chosen to shy away from China, where two of its domestic rivals, ANZ and Commonwealth Bank, have bought significant stakes in four regional banks. Instead, NAB chief executive John Stewart intends to focus on three key areas where it believes it has an advantage: agricultural, wealth management and the UK-developed financial solutions centres. In particular, the bank is keen to export its strength in agricultural banking and to take on the world's biggest lender in that market, Rabobank, which has been building its business in Australia since 1994 and is now posing a real threat to the local banks' grip on the sector. NAB lies second across the globe to the Dutch Rabobank and is closely studying possibilities of expansion in Canada, the US mid-west and South America. Options include building a network of highly mobile teams of rural lending managers backed by a NAB regional office or the more likely plan of establishing a joint venture with a major regional bank using its knowledge and experience of the local agricultural market. The same applies to the experience NAB's MLC subsidiary has gained through the development of the country's superannuation industry, which is now one of the most sophisticated savings markets in the world. While NAB sold its MLC wealth management operations in Hong Kong and Indonesia to Axa Asia Pacific a year ago, it is now targeting the UK, western Europe and even North America, where the crossover of demographics, styles of savings and marketing methods are very similar to Australia. The European market offers NAB the quickest and easiest opportunities to expand, given what it has learned from grafting wealth management services on to its retail banking subsidiaries in UK, the Yorkshire and Clydesdale banks, following their respective pushes into the more profitable areas of southern England. Mr Stewart is also keen to export the financial solutions centre model developed by NAB in Britain. These are run by individual managing partners entrusted with a large degree of independent decision-making powers to lend to small and medium-sized businesses and wealthier individuals. They also gain a share of the profits.
© 2007 Sydney Morning Herald
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