Nab Ditches Retail Dream For Asia
Sydney Morning Herald
Thursday November 11, 1999
National Australia Bank yesterday outlined plans to consolidate its Asian operations and close its offices in Taiwan and India amid speculation it will lodge a bid for Ulster Bank in Ireland.
NAB is giving up on plans to build a retail presence in Asia and, for the time being, will focus on developing its wholesale financial services in Hong Kong, Singapore, Tokyo and South Korea.
NAB general manager Asia, Mr Jeff Mitchell, said the bank would close its loss-making Taipei office as well as offices in India, and downgrade its operations in Thailand. It will maintain its presence in Malaysia and Indonesia.
He said most of the revenue from Taiwan came from middle market trade financing a segment of the market the company had decided to abandon. ``It's fair to say it [Taiwan] has never been a meaningful contributor."
Mr Mitchell said the repositioning was a result of the turmoil that had swept through the region two years ago. ``Demand for foreign currency funding by corporations in Thailand has all but disappeared since the currency shocks of 1997 and 1998," he said.
NAB is forecasting increased profitability from its Asian operations as the region bounces back from recession.
``From a macroeconomic perspective, most of the countries seem to be coming out of what was a deep slowdown," Mr Mitchell said.
``Competition is starting to pick up again because people are prepared to provide credit back to these markets.
``The repositioning of investments in no way should be taken as us closing the door on the potential for acquisitions in the region."
NAB has $12 billion worth of its assets in Asia, equal to 4.8 per cent, and the region accounted for 2.4 per cent of operating profit in the financial year just ended.
While NAB is repositioning in Asia, banking analysts believe it is one of 10 banks that have expressed interest in buying Ulster Bank from National Westminster Bank, which is offloading Ulster as part of its takeover defence against Bank of Scotland.
Bids for Ulster Bank close today. Analysts expect it will be sold for about #2 billion ($5.1 billion).
NAB chief executive Mr Frank Cicutto said last week the bank was looking for acquisitions and Britain was a key area for growth. Mr Cicutto was in Ireland last month but said he was only there for the rugby.
Merrill Lynch analyst Mr Mike Macrow said: ``They've definitely said enough to say they're probably likely to be involved.
``That's why they delayed announcing a share buy-back, because they might need the money. NAB has got as good a chance as anyone, and if they get a bit bigger it could lead to a separate listing of the UK operations."
Ulster Bank has about 107 branches in the booming Republic of Ireland and about 88 in Northern Ireland.
NAB shares closed 33c higher at $24.13.
© 1999 Sydney Morning Herald
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