It’s been a big week for the National Australia Bank.
It’s raised $2 billion from the big end of its share register and doing its best to get smaller holders to tip in the remaining $750 million it wants and it’s had to reveal a credit ratings downgrade for its UK subsidiary.
But it has tempered that with a deal to move deeper into wealth management and advice and it has also offered a $100 million carrot to customers to keep them happy.
And all that was after it moved last month to buy the Australian operations of the UK insurer and fund manager, Aviva, for $825 million.
It’s a hectic pace.
The fee cut got the majority of the headlines, all favourable. No wonder; it’s in the league of ‘man bites dog’; it’s odd to see a bank claiming to be doing something good for customers.
NAB said it will abolish fees on overdrawn accounts from October 1 with the move applying to all of its personal transaction and savings accounts.
"These fees currently impact on around 700,000 NAB personal transaction or savings account customers a year," NAB said in a statement.
"They also generate the most customer complaints to the bank of any bank fee and result in more customer complaints to the bank than any other matter."
Overdrawn account fees are charged when a customer’s personal transaction or savings account is overdrawn. For some banks these fees can be as high as $40 to $50 on each occasion.
NAB said it already had cut overdrawn accounts fees in 2008 from $50 to $30.
"Most of our customers are using their everyday personal transaction accounts to pay bills electronically," NAB Personal Banking Group Executive, Lisa Gray said.
"They are managing multiple direct debits and automatic bill payments.
NAB said in a letter to customers: "By getting rid of these fees we hope to build stronger relationships with you and help you to do more with your money.
"You have our word, this decision is final. There are no disclaimers, no reversing the decision and importantly, no recouping the fee somewhere else.
Some banking analysts claim this will cost the bank $100 million a year.
And yesterday also saw a more strategic move from the bank: a $99 million deal that will see it acquire an 80% of the wealth management business of Goldman Sachs JBWere.
The advisory business that operates on behalf of high net-worth clients will become part of NAB’s wealth management business.
It will fit into the MLC arm of NAB, which is completing the Aviva Australia purchase.
The latter deal will make the NAB the largest life insurance company in the country, and give it control of the Navigator platform developed over a number of years by Aviva which will be a vital wealth management and funds management offering to clients.
The previously 100% owned Goldman Sachs business will operate under the name of JBWere and will have GSJBW as a 19.9% shareholder.
JBWere is said to have 22,000 clients with assets under advice of $38 billion and funds under management of $10 billion.
"JBWere will remain a centre of specialist expertise, focused on delivering advice driven wealth solutions to high net worth clients, and become a portfolio business of NAB’s wealth division, MLC & NAB Wealth.
"The alliance incorporates a strategic distribution relationship which enables GSJBW to distribute certain products to JBWere on an exclusive or preferred basis," Nab said yesterday.
Goldman Sachs will hang on to its investment banking business in Australia where it is a sizeable player, thanks to the contacts it picked up from the 55% stake it bought in JBWere.
Goldman Sachs may now move to acquire the outstanding 45% of the investment banking side it doesn’t own.
JBWere advisers will retain full access to the existing range of services, investment research and products currently available through Goldman Sachs JBWere, as well as accessing additional services from NAB and MLC.
"JBWere’s pre-eminent reputation for providing wealth management services to high net worth individuals and National Australia Bank’s strong footprint in business and private banking is a great combination," NAB CEO, Cameron Clyne said.
"Our Australian Wealth business, MLC & NAB Wealth, has a long history in developing and nurturing wealth management businesses that service private wealth and institutional clients under their own distinct brands, including JANA and Godfrey Pembroke.
"At the NAB strategy update in March, I indicated private wealth was a business with significant upside and JBWere adds to our capability and brands in that area," Mr Clyne said."
NAB shares eased 18 cents to $22.90 on both bits of news yesterday.
The potentially gloomy news for the NAB this week was the downgrade for its UK unit Clydesdale Bank which lost its AA-credit rating.
The cut came in a review of UK banking by Standard & Poor’s which has downgraded its view on the outlook for British banks.
Gloomy, to use a one word description.
S&P said that anticipating higher lending losses over the next three years, it was cutting Clydesdale Bank’s long-term rating by one notch to A+ from
