National Australia Bank (NAB) says it plans to get rid of its British loss-making investments so that it can focus on improving operations at home and in New Zealand. NAB’s new CEO, Andrew Thorburn, has implemented a program to correct the mistakes of previous managements.
On Thursday Mr. Thorburn said his company may float Glasgow-based Clydesdale Bank as well as Yorkshire Bank, a decision which should alleviate investor concern.
Clydesdale Bank and Yorkshire bank both share a banking license in the UK, although it is held by the Clydesdale.
Mr. Thorburn said regarding the 2014 full year results:
“While our Australia and New Zealand franchises are in good shape, it is disappointing to record a full year result that includes $1.5 billion after tax in UK conduct provisions and other impairments.”
“We know there is value in focusing on the core business and in building a strong Australian and New Zealand franchise with real clarity around a customer-focused strategy that is executed well. Our Executive Leadership Team is focused on delivering a better experience for our customers and better returns for our shareholders.”
Andrew Thorburn became Managing Director and Group CEO of NAB Group in August 2014. (Photo courtesy of NAB Group)
NAB has had to sit red-faced amid investor near-panic as Yorkshire and Clydesdale banks lost money and mis-sold products.
NAB earnings in 2014 declined by almost 10%, mainly because of the bad performance of the two British banks. Although not his fault, he will be paying for mistakes made by his predecessors by receiving a near record low bonus.
Mr. Thorburn has other major problems. NAB is Australia’s leader in business banking, an area that has been deteriorating and is coming under attack from a growing number of competitors.
The Melbourne-based bank says it aims to consolidate its foothold in specialists areas, such as health and agroindustry, as well as private-dwelling mortgages.
Mr. Thorburn said he was pleased with the ongoing momentum regarding personal banking within Australia and the more stable performance from business banking in H2. Australian banking grew by 1.8% (excluding volatile markets and treasury income) over the September 2014 half year.