Nab Resets Its Sights On Opportunities Overseas
The Age
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 now restored to what analysts regard as full financial health since the subsequent scandal over foreign exchange currency dealing in 2004, NAB's senior management has turned its attention to taking advantage of a growing number of international opportunities that have opened up for it. But unlike when it spent $1.7 billion to buy into the North American home loans market in 1997, NAB will steer clear of buying an overseas retail banking and lending operation, an area that is fiercely competitive and which, it believes, will tie up too much capital to acquire and develop. For that reason, it has chosen to shy away from China, where rivals ANZ and Commonwealth Bank have bought stakes in four regional banks. Instead, NAB chief executive John Stewart intends to focus on three areas where it believes it has an advantage: agricultural, wealth management and the financial solutions centres developed in Britain. 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 threat to local banks' grip on the sector. NAB lies second in the world to Dutch-based Rabobank and is studying possibilities of expansion in Canada, the US Midwest and South America. Options include a network of highly mobile teams of rural lending managers backed by an NAB regional office, and the more likely plan of a joint venture with a major regional bank, using its knowledge and experience of the local agricultural market. Mr Stewart is not content to sit and watch Rabobank continue to seize market share in his backyard, and believes NAB has knowledge gained from helping farmers during Australia's long droughts that can be exploited overseas. The same applies to the experience NAB's MLC subsidiary has gained through the development of the superannuation industry, 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 Britain, Western Europe and even North America, where the demographics, styles of saving and marketing methods are similar to Australia's. Europe offers NAB the quickest and easiest opportunities to expand given what it has learnt from grafting wealth management services on to its retail banking subsidiaries in Britain, the Yorkshire and Clydesdale banks, after their respective push into the more profitable areas of southern England. Mr Stewart is also keen to export the model of financial solutions centres NAB developed in Britain. These are run by individual managing partners entrusted with independent decision-making powers to lend primarily to small and medium-sized businesses and wealthier individuals. They also share in profits garnered from expanding their own outlets.KEY POINTS ? NAB ventures overseas again after its Homeside debacle.? It will focus on financial centres in Britain, wealth management and agricultural banking.? It is keen to take on Rabobank.
© 2007 The Age