Once again it pays to look at what companies, especially banks, are doing, not what they are saying.
There was NAB CEO Cameron Clyne complaining last week to a credulous Australian Financial Review about how we were facing a possible crisis because the cost of bank deposits was rising and becoming volatile.
Perhaps a tax break, to treat deposits like super, could be in order, Cameron said.
Of course the Reserve Bank shot that down a day later with a study on bank margins and funding. The NAB went to ground leaving it to the Australian Bankers Association to defend the fattening interest margins (the first for years) and the subsidising of mortgages by keeping rates higher for business, credit cards and other loans.
And then this morning the NAB shot down its claim to have bank deposits treated the same as superannuation, (by getting a tax deduction) by spending nearly $900 million to go deeper into the super and managed funds businesses.
The NAB is buying Aviva Australia Holdings’ wealth management business for $825 million: these include the Aviva’s life-insurance operations and investment platform, called Navigator.
NAB said the acquisition was expected to be earnings per share (EPS) and return on equity accretive in the first full year following acquisition, excluding integration costs.
NAB chief executive Cameron Clyne said the acquisition would enhance the bank’s offering in key wealth management segments, including insurance and investment platforms.
“The acquisition meets the objectives outlined in the NAB Strategy earlier this year,” Mr Clyne said.
“Our MLC and NAB wealth management business is a key area of growth for us and we are well positioned to respond to changes currently taking place in the wealth management market as a result of the financial crisis and regulatory reviews.”
But the wealth management business of the NAB has hardly been a big success in the past year, hammered — like all funds managers — by the credit crunch and recession.
The NAB would argue that it’s getting the business cheap with Aviva wanting to get out of Australia. But it is going deeper into funds management at a time when it is going to be under pressure from poor returns, rising unemployment, which will clip super levy flows and the continuing impact of the recession.
Once again our banks are big enough, fat enough and ugly enough to continue to do big deals that expand their dominance.
The ACCC has become restive over this increased domination. ACCC approval is needed for the Aviva deal … will it wave it through?
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.