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== 1981-2000 merger and rapid overseas expansion ==
== 1981-2000 merger and rapid overseas expansion ==
[[Image:Mlclogo.png|right|thumb|MLC logo]]
[[Image:Mlclogo.png|right|thumb|MLC logo]]
[[Image:Nab tower Melb.jpg|thumb|upright|NAB House, Melbourne (Former NAB headquarters 1978 - 2004)]]
In 1981, National Bank of Australasia Limited merged with The Commercial Banking Company of Sydney Limited to form National Commercial Banking Corporation of Australia Limited and subsequently changed its name to National Australia Bank Limited (NAB).<ref>{{cite web|title=NAB Annual Report 1996|publisher=NAB|date=1996|url=http://www.nabgroup.com/vgnmedia/downld/1996AnnualReport.pdf}}</ref>
In 1981, National Bank of Australasia Limited merged with The Commercial Banking Company of Sydney Limited to form National Commercial Banking Corporation of Australia Limited and subsequently changed its name to National Australia Bank Limited (NAB).<ref>{{cite web|title=NAB Annual Report 1996|publisher=NAB|date=1996|url=http://www.nabgroup.com/vgnmedia/downld/1996AnnualReport.pdf}}</ref>


Revision as of 08:58, 5 January 2010

National Australia Bank Limited
Company typePublic (ASX: NAB)
IndustryFinancial services
Founded23 June 1893
HeadquartersAustralia Melbourne, Australia
Area served
Australia Australia
New Zealand New Zealand
United Kingdom UK
United States USA
Hong Kong Hong Kong
Singapore Singapore
Key people
  • Cameron Clyne (CEO)
  • Michael Chaney (Chairman)
    • ProductsBanking, financial and related services
    Increase $4.724 billion AUD (2008)
    Number of employees
    		39,729 [1]
    WebsiteNational Australia Bank
    nab Group
    MLC
    UBank

    National Australia Bank (or NAB) is one of the largest financial institutions and banks in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation,[1] it held total assets of A$657 billion as of 30 September 2008 and its operating income in 2008 was A$15.4 billion.[2] It operates across 10 countries serving 8.3 million consumer and business banking customers and over 2.3 million wealth management customers.[3]

    NAB operates 1,714 branches and service centres and 2,939 ATMs globally.[3] NAB has a "AA" senior debt rating by S&P.[4]

    Core business

    File:NabLogo.PNG
    NAB logo

    The National Australia Bank Group is organised around five key businesses: Australia - NAB, UBank and MLC brands; United Kingdom - Clydesdale Bank and Yorkshire Bank brands; New Zealand - Bank of New Zealand brand; United States of America - Great Western Bank brand and Wholesale Banking (formerly nabCapital), which operates internationally.

    In Australia, the group maintains three consumer facing visual identities: NAB, MLC and UBank.

    Early history

    In 1893, National Bank Limited was formed. Up until 1 October 1981 it continued to trade as The National Bank of Australasia Limited, only after the merger with the Commercial Banking Company of Sydney Limited did it become known as National Australia Bank.

    National Bank of Australasia Limited

    In 1858 Alexander Gibb, a Melbourne gentleman, enlisted Andrew Cruickshank, a local merchant and pastoralist, to raise the capital to establish National Bank of Australasia with headquarters in Melbourne. Cruickshank became its first chairman while Gibbs left after being passed over for the position of General Manager. The bank opened its first branch in South Australia the same year.

    Expansion to other Australian states followed, with branches opening in Tasmania (1859), Western Australia (1866), New South Wales (1885) and finally Queensland (1920).

    An early branch established in Mauritius (1859) closed within a year, but a London branch (1864), established to handle financing and payment for Australian exports of wool, gold and other commodities, and imports to Australia, was more successful.

    National Bank of Australasia was one of many banks that closed its doors during the banking crisis of 1893. Director John Grice was active in the crisis, from which the bank re-emerged as a public limited company, incorporated on 23 June 1893.

    For the next half century, growth was stimulated by a number of acquisitions:

    • Colonial Bank of Australasia (est. 1856) in 1918, bringing additional branches in Victoria and New South Wales.
    • Bank of Queensland in 1922, with branches in Queensland, New South Wales and Victoria. The Bank of Queensland was itself result of the merger in 1917 of Royal Bank of Queensland (est. 1886) and Bank of North Queensland (est. 1888).
    • Queensland National Bank (est. 1872) in 1948, with branches in Queensland, New South Wales and Victoria.
    • Ballarat Banking Company (est. 1865) in 1955

    The bank opened a representative office in Tokyo in 1946, later upgraded to a branch in 1985. The bank's overseas interest expanded more rapidly in the 1970』s. It opened a branch in Singapore in 1971, and representative offices in Jakarta (1973) and Hong Kong (1974). It took minority interests in merchant banks in these locations at the same time, and in Hong Kong established a 50-50 joint venture merchant bank with Mitsubishi Bank and Trust, but withdrew from these arrangements in 1984. Its first US presence was established in 1977 with a branch and an agency in Los Angeles that closed in 1993.

    The Commercial Banking Company of Sydney Limited (CBC)

    Former CBC Bank in Wagga Wagga, NSW

    On the 8 September 1834 the Sydney Herald carried a notice titled "Commercial Banking Company of Sydney" proposing the establishment of a new bank.[5] It began operations on 1 November 1834[5] and in 1848 was incorporated by an Act of the New South Wales Parliament. Sir Edward Knox was the first Bank Manager and later a director.[6] Thomas Barker (born 1799 London, England, died 1875 Bringelly, New South Wales), a manufacturer, engineer, politician, landowner and philanthropist was a notable director and chairman.

    The CBC grew to service the expanding pastoral and farming industries of the then Colony of New South Wales.[7]

    1981-2000 merger and rapid overseas expansion

    File:Mlclogo.png
    MLC logo

    In 1981, National Bank of Australasia Limited merged with The Commercial Banking Company of Sydney Limited to form National Commercial Banking Corporation of Australia Limited and subsequently changed its name to National Australia Bank Limited (NAB).[8]

    The expanded financial base of the merged entity triggered significant offshore expansion over ensuing years. Representative offices were established in Beijing (1982), Chicago (branch 1982), Dallas (1983), Seoul (1983, upgraded to a branch in 1990), San Francisco (1984), Kuala Lumpur (1984), Athens (1984, closed 1989), Frankfurt (1985, closed 1992), Atlanta (1986), Bangkok (1986), Taipei (1986 upgraded to branch 1990), Shanghai (1988, closed 1990), Houston (1989) and New Delhi (1989).

    In 1987, NAB bought Clydesdale Bank (Scotland) and Northern Bank (Northern Ireland and Republic of Ireland) from Midland Bank. It rebranded Northern Bank branches in the Republic of Ireland to National Irish Bank and changed both banks' logos from that of the Midland Bank. In 1990, NAB bought Yorkshire Bank (England and Wales).

    Further acquisitions followed - Bank of New Zealand in 1992, which at the time had about a 26% market share in the New Zealand market, and Michigan National Bank (MNB) in 1995. NAB had earlier rationalised its operations in the US and closed its offices in Atlanta, Chicago, Dallas, Houston, and San Francisco in 1991.

    This period of rapid expansion through acquisition concluded with the purchases in 1997 of HomeSide Lending, a leading US mortgage originator and servicer based in Florida, and most significantly, the acquisition in 2000 of MLC Limited (and related MLC entities) for $4.56bn, one of the biggest mergers in Australian corporate history.

    NAB encountered a difficult period in the period 2000-2005. In 2000, NAB sold Michigan National Bank to ABN AMRO, then in 2001 sold HomeSide's operating assets for US$1.9b to Washington Mutual, the largest US savings and loan company, as well as the mortgage unit's loan-servicing technology and operating platform.

    Challenges

    HomeSide (USA)

    NAB booked two write-downs associated with HomeSide. First, in July 2001, NAB had a $450 million write down of the value of its capitalised mortgage servicing rights (CMSRs) during the quarter ending June 30, 2001, and was the result of exceptionally high mortgage refinance volumes which lowered the value of the CMSRs, combined with a more challenging capital markets environment in which to hedge interest rate risk. This was followed shortly by a second write-down reported in September totalling $1.75 billion; this second write-down consisted of US$400 million from an incorrect interest rate assumption embedded in the mortgage servicing rights valuation model, US$760 million from changed assumptions in the model flowing from the continued unprecedented uncertainty and turbulence in the mortgage servicing market, and US$590 million from writing off of the goodwill. In total, NAB booked $2.2 billion in losses due to HomeSide.

    Foreign currency trader staff fraud

    In 2004, NAB discovered that as a result of unauthorised spot trades on its foreign currency options desk, losses totalling $A360 million had been covered up. Investigations by Price Waterhouse Coopers and the Australian Prudential Regulation Authority highlighted a need for cultural change. The losses were a result of a failed speculative position where the traders falsified profits to trigger bonuses over a number of years. In order to actually generate the reported profits, the traders speculated on the US dollar, betting that it would rise against the Australian dollar and other currencies. This incident led to the resignations of CEO Frank Cicutto and Chairman Charles Allen.[9] In 2006, two former NAB foreign currency options traders were sentenced on charges brought by ASIC and incurred jail terms.[10]

    Tax evasion and customer overcharging in Ireland

    The Irish subsidiary of the bank, National Irish Bank was the subject of a six-year Inquiry carried out by Inspectors appointed by the Irish High Court. They established that National Irish Bank had engaged in overcharging its own customers and tax evasion schemes prior to 1998.[11] Mr Justice Peter Kelly, an Irish High Court judge commented following publication of the Report "The edifice of banking is built on a foundation of trust. On the Inspectors findings there was a breach of trust. The operation was carried out over a period of years in a deliberate fashion".[12] The Director of Corporate Enforcement subsequently applied to the High Court to have 9 senior managers barred from being an officer of any company.[13]

    Turnaround

    File:National-nab.png
    Logo change in Australia 2007

    In 2005, NAB announced a cut of 2,000 Australian jobs as part of a global cost-cutting program with the intention of cutting around 4,200 positions – about 10.5% of its total workforce globally.[14]

    It began to outsource back office positions offshore, beginning with a pilot with 23 jobs from the accounts payable department in Melbourne going to Bangalore, India in an agreement with Accenture.[15] Later that year, it sold Northern Bank and National Irish Bank to the Danish Danske Bank. Over 200 additional jobs had been sent offshore by 2006.[16]

    NAB Headquarters at Melbourne Docklands

    As part of the culture change program, a new Australian head office was purpose built at "Docklands" in Melbourne. This building is characterized by its open plan layout and was officially opened in October 2004. [17] [18] After Cameron Clyne became CEO in 2009, the Docklands building became the global headquarters replacing 500 Bourke Street.

    By 2006, NAB had turned its fortunes around, reporting an industry record $4.3 billion profit and winning two local Bank of the Year awards. It also had a major reform which included the refurbishment of all of its branches, and the replacement of signage in and around National branches and buildings, being changed from 'National' to 'nab'.

    In May 2007 NAB announced that it would delist from the New York Stock Exchange,[19] and this took place in Aug 2007. NAB delisted from the London and Tokyo exchanges in 2006.

    In March 2008 NAB announced that it would send maintenance and support for some core banking applications to India through an offshoring arrangement with Infosys and Satyam, affecting another 260 employees.[20]

    Global Financial Crisis

    On 25 July 2008, NAB's announcement of an additional $830 million (AUD) provision associated with deterioration in US real estate markets triggered the biggest single-day fall in its share price in 21 years, wiping over $7 billion (AUD) from the stock's value.[21]

    Growth

    Launch of UBank

    File:UBank logo.jpg
    UBank logo

    In October 2008, NAB launched a branchless direct bank bank trading separately as "UBank". NAB stated it aimed to attract new retail customers while operating independently to its other retail brands [22], and in its 2009 annual report, NAB claims that this strategy has been "successful". [23]

    UBank operates under NAB's banking license and participates in the Australian government's new deposit guarantee scheme.[24][25] Deposits were said to exceed over $500 million in one month.[26] [27] UBank was reported to be the first beneficiary of NAB's broad ranging technology replatforming project.[28] [29]

    UBank is cited as an example of effective use of nontraditional marketing such as social media [30][31], but also uses traditional marketing such as print [32] and television. [33] NAB claimed UBank's "customer advocacy and satisfaction levels" to be "amongst the highest of any institution in Australia" [34] In August 2009, UBank launched a new online savings account ("USaver") that was reported to differentiate through its easy online application process.[35][36] In its 2009 annual report, NAB claimed "almost 10,000 new customers in a month" for UBank's USaver product. [37]

    Recently, UBank has been acknowledged as the driver of NAB's fast growth in deposit market share compared to other major banks.[38] [39] In December 2009, UBank's USaver online savings account was awarded Money Magazine's "Best of the Best" award.[40] NAB's UBank has been compared to Qantas' Jetstar in terms of a strategy of internal innovation with the objective of opening new market segments for the parent company. [41]

    Post-GFC acquisitions

    Under the leadership of new CEO Cameron Clyne who took office in January 2009[42], NAB undertook a series of acquisitions taking advantage of the post GFC environment.

    In June 2009 NAB announced it was to pay A$825m ($660m:£401m) for UK insurer Aviva's Australian wealth management businesses Navigator. The deal was NAB's first acquisition under Cameron Clyne. NAB beat off competition from AMP for Navigator.[43]

    In July 2009 NAB acquired an 80% stake in the private wealth management division of Goldman Sachs JBWere, for A$99m..[44]

    In August 2009 NAB announced its acquisition of the mortgage business of Challenger Financial Services for $385 million. This purchase also includes PLAN, Choice, and FAST mortgage aggregation businesses and approximately 17.5% in Homeloans Ltd.[45] This transaction was seen in relation to rivals Commonwealth Bank's purchase of non-bank lenders Aussie Home Loans and Wizard Home Loan in late 2008, and Westpac's purchase of RAMS Home Loan in 2007.[46]

    Sponsorship

    The National Australia Bank is a major sponsor of Australian rules football, both at grassroots and elite level. It supports Auskick, an initiative to improve young footballers, as well as the NAB Cup (an Australian Football League pre-season competition), the NAB AFL Rising Star award; and the AFL National Draft. Other significant sporting sponsorships include the Socceroos, and the 2006 Commonwealth Games. Support is also given towards community group volunteers around Australia. In recent years, NAB has provided financial support and relief to drought affected farmers. From 2008-2010 NAB is sponsoring the South Sydney Rabbitohs.

    Customer Relationship Management

    NAB has received recognition as an early adopter and leader in CRM (Customer Relationship Management).[47] It is a large user of the Siebel CRM software and developed and implemented its "National Leads" analytical CRM system to support its sales force in identifying relevant customer sales & service opportunities.[48][49]

    In 2006, NAB revamped its CRM system having slipped behind other banks investing in CRM platforms using cutting-edge technology.[50][51]

    NAB also deployed its National Leads system to New Zealand and United Kingdom. In 2006, NAB was named the winner of the IFS/Cap Gemini Financial Innovation awards for its National Leads system.[52]

    Corporate responsibility initiatives

    In 2008, NAB invested $33.5 million in corporate responsibility initiatives. Its target is to spend 1% of cash earnings before tax in this area.[53]

    Key people

    Group Chief Executives

    Service years CEO
    2009- Cameron Clyne
    2004-2009 John Stewart
    1999-2004 Frank Cicutto
    1990-1999 Don Argus

    Other key people

    CEO of NAB Personal Banking in Australia: Lisa Gray [54][55] General Manager NAB Broker: Matt Lawler [56] CEO of NAB Business Bank in Australia: Joseph Healy [54] General Manager of UBank: Gerd Schenkel [57][58] CEO of Clydesdale and Yorkshire in UK: Lynn Peacock [54] CEO of BNZ: Andrew Thorburn [54] President Great Western Bank: Jeff Erickson [59]

    Financial summary

    Sourced from NAB financial results.[60]

    Financial Year Cash Profit, $m Total Assets, $b
    2009 3,841 654
    2008 3,916 657
    2007 4,386 612
    2006 3,782 484
    2005 3,156 423

    Summary: M&A activity

    Year Entity bought/sold (A)quisition/ (D)ivestiture
    1918 Colonial Bank of Australasia A
    1922 Bank of Queensland A
    1948 Queensland National Bank A
    1955 Ballarat Banking Company A
    1981 Commercial Banking Company of Sydney A
    1987 Clydesdale Bank A
    1987 Northern Bank A
    1992 Bank of New Zealand A
    1995 Michigan National Bank A
    1997 Homeside Lending A
    2000 MLC A
    2000 Michigan National Bank D
    2001 Homeside Lending D
    2005 Northern Bank D
    2009 Aviva A
    2009 Goldman Sachs JB Were A
    2009 Challenger Financial Services A
    2009 AXA Asia Pacific (proposed) A

    Board of Directors

    Michael Chaney, Chairman

    Cameron Clyne, Group CEO

    Patricia Cross

    Daniel Gilbert

    Mark Joiner, Group CFO

    Paul Rizzo

    Jillian S Segal

    John Thorn

    Geoffrey Tomlinson

    Michael Ullmer, Group Deputy MD

    Sir Malcolm Williamson

    John Waller, Chairman of BNZ



    References

    1. ^ Murdoch, Scott (2009-01-26). "Big Four Australian banks have joined the global elite". News Limited. The Australian. Retrieved 2009-02-03.
    2. ^ "2008 Full year financial results". NAB. 2008-10-21.
    3. ^ a b "2008 annual reports". NAB.
    4. ^ "NAB Debt Investor Presentation" (PDF). NAB. May 2008. Retrieved 2009-06-22.
    5. ^ a b "Some Important Dates In The C.B.C.'s History". Macquarie Communications. 2008-09-28.
    6. ^ "Directors (CBC)". Macquarie Communications. 2008-09-28.
    7. ^ "Superbrands. NAB". Superbrands Australia. 12 June 2008.
    8. ^ "NAB Annual Report 1996" (PDF). NAB. 1996.
    9. ^ "Frank Cicutto Resigns as NAB boss". ABC The World Today. 2 February 2004.
    10. ^ "Former NAB foreign currency options traders sentenced". Australian Securities and Investments Commission. 4 July 2006.
    11. ^ "Summary of Report of the Investigation into the affairs of National Irish Bank Ltd and National Irish Financial Services Limited" (PDF). The High Court. 2004-07-30. {{cite web}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
    12. ^ "Ex-NIB executive barred for 10 years by court". Eircom.net. 2005-10-27.
    13. ^ "ODCE seeks nine disqualifications arising from National Irish Bank / National Irish Bank Financial Services Report" (DOC) (Press release). Director of Corporate Enforcement. 2005-08-28.
    14. ^ "NAB mixes job cuts with record profits". The Age (Melbourne). 11 May 2005.
    15. ^ "NAB to export 23 jobs to India". Sydney Morning Herald. 26 September 2005.
    16. ^ "Spotlight on National Australia Bank". Financial Sector Union.
    17. ^ "National Australia Bank Officially Opens New Flagship Docklands Complex". NAB.
    18. ^ "NATIONAL @ DOCKLANDS". Architecture Australia.
    19. ^ "National Australia Bank Earnings". CNBC. 2007-05-09.
    20. ^ "NAB sends jobs offshore". The Australian. 2008-03-04. Retrieved 2008-03-04.
    21. ^ "NAB's $7 billion wipeout". The Age, Melbourne. 2008-07-25. Retrieved 2008-07-25.
    22. ^ "NAB moves into new territory with U". Melbourne Herald-Sun. 2008-10-02. Retrieved 2008-10-02.
    23. ^ "2009 Annual Report" (PDF). NAB. 2009-12. {{cite web}}: Check date values in: |date= (help)
    24. ^ "About us - Customer help - UBank - A good place for money. Backed by NAB". UBank. Retrieved 2008-10-29.
    25. ^ "UBank - who we are". UBank.
    26. ^ "UBank collects $500 m in first month". The Sheet. 2008-11-04. Retrieved 2009-06-22.
    27. ^ "NAB Australian Region market update" (PDF). NAB. 2008-11-17.
    28. ^ "NAB UBank IT 'well advanced'". ZDNet. 2009-04-29.
    29. ^ "Roadmap for $1b IT overhaul done: NAB". The Australian. 2009-04-28.
    30. ^ "NAB goes online to reach people allergic to banks". Sydney Morning Herald. 2009-04-23.
    31. ^ "UBank". Twitter.
    32. ^ "See more executions from UBank's USaver press campaign". Newspaper works. 2009-09-20.
    33. ^ "USaver TV Commercial". UBank Moneybox. 2009-08-15.
    34. ^ "UBank Fact Sheet". National Australia Bank. 2009-06-30.
    35. ^ "NAB pioneers 'five minute' online bank account". IT Wire. 2009-08-06.
    36. ^ "UBank launches on-line savings account with unbeaten interest rate". NAB. 2009-08-06.
    37. ^ "2009 Annual Report". NAB. 2009-11-01.
    38. ^ "NAB deposit tactics show promise". The Sheet. 2009-12-01.
    39. ^ "Big two grab largest slice of credit". Australian Financial Review. 2009-12-02.
    40. ^ "Best of the Best: 2010 Survival Guide". A Current Affair, Channel 9. 2009-12-01.
    41. ^ "Can NAB's Ubank emulate Jetstar?". Business Spectator. 2009-12-07.
    42. ^ "NAB axes Fahour's role in rejig". The Age, Melbourne. 2008-12-18. Retrieved 2009-06-22.
    43. ^ "Aviva sells Australian Business". BBC. 2009-06-22.
    44. ^ "NAB snaps up 80% of JBWere wealth unit". The Age. 2009-07-29.
    45. ^ "NAB to acquire Challenger's mortgage management business" (PDF). ASX. 2009-08-18.
    46. ^ "National Australia Bank Buys Challenger Mortgage Unit". Bloomberg. 2009-08-18.
    47. ^ "National Australia Bank and Teradata Win Overall NCDM Award for Excellence in Database Marketing". 17 December 2008.
    48. ^ "National Australia Bank receives global recognition in Customer Relationship Management". NAB media release. 10 December 2003.
    49. ^ "NAB's track record a winner". Sydney Morning Herald. 22 February 2005.
    50. ^ "CRM adopter plays catch-up". The Australian. 19 September 2006.
    51. ^ "Bank's CRM revamp hits half-way mark". Computerworld. 16 March 2006.
    52. ^ "ifs/Capgemini Financial Innovation Awards 2006". ifs School of Finance.
    53. ^ "2008 Shareholder Review". National Australia Bank. Retrieved 2009-02-20.
    54. ^ a b c d "Group Executive Committee". NAB.
    55. ^ "Shades of gray for NAB's retail bank". The Age. 2008-09-08.
    56. ^ "Five minutes with Matt Lawler". Broker News. 2008-08-04.
    57. ^ "Gerd Schenkel". Social Networking Forum Asia.
    58. ^ "Gerd Schenkel". Social Networking Forum Asia.
    59. ^ "Message from the President". Great Western Bank.
    60. ^ "Financial Results". NAB.
    Retrieved from "https://en.wikipedia.org/w/index.php?title=National_Australia_Bank&oldid=335968590"