Ross McEwan

National Australia Bank (NAB) has completed the acquisition of Citigroup’s Australian consumer business (Citigroup Consumer Business).

NAB Chief Executive Officer Ross McEwan said: “The acquisition of the Citigroup Consumer Business supports our ambition to build a leading personal bank with a simpler, more digital experience.

“We have good momentum in our Personal Banking division, driven by our aim to be simpler and more digital for customers and colleagues.

“We welcome our new Citigroup colleagues to NAB. They bring deep banking expertise and insights into how customers’ needs continue to change.

“This will enable us to create more innovative, simple and digital products and services for customers, particularly in unsecured lending and supporting business partners with white label products.”

NAB has set up a dedicated integration team to manage the transition of the Citigroup Consumer Business into NAB’s Personal Banking division and subsequent integration of both businesses.

Key financial metrics relating to the acquisition were reported in NAB’s 2022 Half Year Investor Presentation^[1] on 5 May 2022.

Background

• In August 2021, NAB reached an agreement to purchase the Citigroup Consumer Business, including its home lending portfolio, unsecured lending business, retail deposits business, and private wealth management business.
• The acquisition was subject to certain conditions, including approvals from the Commonwealth Treasurer, the Australian Prudential Regulation Authority (APRA) and the Australian Competition and Consumer Commission (ACCC). These approvals have now been received.
• From 1 June 2022 NAB will continue to operate the Citigroup Consumer Business largely on a standalone basis. NAB will communicate with customers about any changes to available products and the NAB service offering. Integration of the Citigroup Consumer Business will occur progressively over the next 2 – 3 years.
• Citigroup Consumer Business customers will continue to use their Citigroup app, card and services.
• There are no changes for NAB customers.
• When the Citigroup Consumer Business is fully integrated, customers will benefit from NAB’s branch footprint, banking app and digital capabilities.

For more information see NAB’s August 2021 announcement^[2] about the agreement to acquire Citigroup’s Australian consumer business.

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[1] https://www.nab.com.au/content/dam/nab/documents/reports/corporate/2022-half-year-investor-presentation.pdf
[2] https://yourir.info/e4600e4db4d0cc89-nab.asx-3A572378/NAB_NAB_announces_Citigroup_agreement.pdf

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Drew Bradford

Australian superannuation funds plan to ramp up their allocations to international assets as they seek to diversify investments and boost returns, according to a NAB survey published last week.

The NAB Superannuation FX Survey found that 72 per cent of Australian funds plan to increase their share of offshore investments over the next two years and are considering unlisted assets such as private debt, infrastructure and real estate. The results indicated funds currently have on average 41 per cent of their assets offshore.

“This survey is a poignant snapshot of what Australian superannuation fund managers are thinking and how they plan to approach investment strategy and foreign exchange risk in the low interest rate world,” said Drew Bradford, NAB Executive General Manager Markets.

“The results show that at the same time that funds are increasing their offshore holdings, they are hedging less of their FX exposure to take on more FX risk,” Mr Bradford said.

“This is because they want to be more responsive to market movements, such as a perceived large undervaluation or overvaluation of the Australian dollar.”

The average hedge ratio applied to international equity exposure has fallen to 29 per cent in 2019 from 39 per cent in 2017, the survey found. Mr Bradford said this drop likely reflects the downtrend in the Australian dollar, from above 80 US cents at the time of the 2017 survey to nearer 70 US cents in 2019, and the expectation that the currency could fall further.

The NAB Superannuation FX Survey examines the hedging techniques of 61 Australian superannuation funds with $1.82 trillion of assets under management, which, according to ASFA data, is about 90 per cent of industry assets under management, excluding self-managed super funds. It is the only survey of its kind in Australia. The survey takes place every two years and the 2019 survey is the ninth edition.

The results also showed that funds are increasingly using target percentages for their foreign currency exposure, rather than traditional hedging ratios. For those funds targeting a percentage of foreign currency exposure, the average desired exposure is 24 per cent in 2019, based on the MySuper or the default option of the fund.

“The move away from traditional hedging ratios is a seismic shift in thinking,” Mr Bradford said.

“More funds want to view currency risk through the same lens as other asset allocation decisions and feel that running a higher foreign exposure is a cost-effective way to protect against any deterioration in risk sentiment,” Mr Bradford said.

Another significant finding of the survey was that internal investment teams are playing a more influential role in setting the strategy for currency decisions.

The NAB Superannuation FX Survey was launched last week at the NAB Super Fund Conference in Melbourne.

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Emma Lawson, Director Fixed Income Currencies & Commodities, said this survey provides a valuable insight in to how superannuation funds are managing Australians’ wealth.

“The environment in which funds operate is evolving quickly, incorporating more regulation, policy changes, pressure to grow and diversify, and technological change,” Ms Lawson said.

“Combine these headwinds with lower FX returns in recent times, and even lower market volatility, and you’ve got a case where super funds are adapting and responding to changing conditions.

The survey showed investment committees are increasingly turning to the expertise of internal strategists to make decisions on managing, or hedging, currency exposure. More than 35% said ‘others’ were making investment decisions, up from 10% in 2015.

Regulation was a significant factor in how superannuation funds set their currency hedging strategy in 2017 and is having an ever-increasing influence on decision making. While most funds are yet to focus on margining and collateral, 30% of funds are starting to do so, indicating they will be of greater importance in the years ahead.

Funds are also focused on the rising cost of transactions, with more than 70% of funds indicating they are considering, or already implementing, transaction cost analysis. Of those, 76% look to their manager or bank to provide this service, while 15% look for an independent provider and 9% do it themselves.

“NAB is here to support super funds in navigating the currency markets. It’s important to us that we back the proprietors and protectors of Australians’ wealth,” said Drew Bradford, NAB’s Executive General Manager Fixed Income Currencies & Commodities.

The NAB Superannuation FX Hedging Survey is Australia’s largest survey of superannuation funds, and the only one of its kind. The 2017 survey questioned 46 funds with $980bn assets under management, representing approximately 43% of the total industry.

Other key findings from the survey include:

• The majority of funds currently use an external overlay manager to implement trades, or hedges, to protect investment against currency exposures, however this is changing with 11% looking to in source, and 9% to outsource in the future
• Funds are increasingly hedging at the member investment-choice level, along with the whole-of-fund level. Implementation is often still done at the asset class level.
• Transaction cost analysis and reporting of ASIC guidelines is very important and most funds look to their asset manager or bank to do this.
• FX forwards remain the dominant product for hedges, with little change in cross-currency swaps and the use of options remained flat.
• There was a rise in emerging market exposure and a significant drop in emerging market currency hedging.   

About the Survey

The 8th Biennial NAB Superannuation FX Hedging Survey involved 46 funds, with $980 billion assets under management (AUM), including industry, corporate and government funds. Self-managed super funds and funds on master trust and other platforms are excluded. Fund responses are based on the investment option with the greatest overall fund balance – in most cases the default fund. The survey interviews took place predominantly in June 2017

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Andrew Hagger

National Australia Bank CEO Andrew Thorburn has announced Andrew Hagger, Group Executive NAB Wealth, has been appointed as Chairman of JBWere.

Mr Thorburn said: “I am delighted to appoint Andrew to this role.”

“His expertise and counsel, including his deep knowledge of this business and the wealth sector, will serve the Board well.”

Andrew Hagger said he felt privileged to step into the JBWere Chairman’s role.

“JBWere has been helping to grow and protect the wealth of Australia and New Zealand’s most successful and innovative families, companies and for-purpose organisations for 175 years.

“I am looking forward to working with the Board and the high-calibre management team, led by CEO Justin Greiner, to continue to advance JBWere’s preeminent position as an innovator in financial services.

“We know there is real desire for expert wealth management advice amongst high net worth clients, but this market is largely underserviced.

“Our new high net worth wealth business model is designed to meet that need and forge a new way forward for private wealth advice.”

JBWere is 100% owned by the NAB Group and has recently embarked on a new Australian strategy of non-exclusive research and distribution arrangements, announcing in January a new strategic alliance with investment bank UBS, and, in April, a new strategic research and distribution alliance with investment bank, Moelis Australia. These alliances help JBWere continue to provide market leading insights, advice and exclusive investment opportunities to their clients.

Earlier this month, NAB announced its new business model for the high net worth market encompassing both JBWere and NAB Private (formally NAB Private Wealth). Under this new model, NAB Private is to become a pure private banking proposition for high net worth clients, offering specialised services such as, structured finance.

NAB Private will also connect clients to JBWere, its specialist private wealth advisory business, when clients are seeking quality advice. More than 60 NAB Private employees are moving to, JBWere, which will provide specialised wealth creation and protection advice.

Mr Hagger replaces former NAB Group Executive, Finance and Strategy, Craig Drummond. Mr Hagger’s appointment is effective 21 April 2016.

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“I’m extremely pleased to have appointed someone with Mr Kent’s extensive experience to the business,’’ said NAB Asset Management general manager, Brendan Donohoe.

“We’re very conscious of the total experience we deliver to our clients and investors in all channels so it was imperative that we hired an individual of the highest calibre to continue to build on the work undertaken by our institutional sales team.

“Given Ross’s extensive industry experience in both institutional and retail distribution, client and business management, and his well-honed leadership and strategic skills, he was a natural fit for the role.”

Prior to joining NABAM, Ross held the position of Institutional Regional Director, Australia & New Zealand at Dimensional Fund Advisors. He has also held both the positions of CEO for Australia and New Zealand and Executive Director at AllianceBernstein, where he was responsible for managing the business and executing the strategy to build the firm’s presence in the regional market.

Mr Kent was also previously Managing Director for AMP Financial Services in NZ, responsible for the local operations across superannuation, life insurance, general insurance and retail banking.

Mr Kent said “The business has an outstanding reputation in the institutional market for both understanding individual client needs and delivering tailored solutions through its diverse range of domestic and global strategies across a wide range of asset classes.

“I look forward to continuing the good momentum built by the team and driving broader business growth.’’

Mr Kent will commence the role on 2 May.

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Tim brings with him 20 years of experience in financial services, most recently as Managing Director of AMP-aligned wealth businesses ipac & Genesys.

Executive General Manager, Wealth Advice, Greg Miller, said: “We’re focused on strengthening our business, committed to meeting customer’s expectations and improving their experience with us, and supporting advisers in providing greater value to their customers.

“We are pleased and excited to have someone of Tim’s capability leading NAB Financial Planning.

“Throughout his career Tim has demonstrated a track record of leading large teams to help advisers grow and develop their businesses, and provide customers with high quality financial advice and an exceptional experience,” Miller said.

Speaking of his appointment Tim said: “NAB Financial Planning is a great business, with 500 advisers around the country – and I’m really looking forward to continuing to grow the business and keep a strong focus on customers.”

Tim successfully led AMP Horizons as a Director where it became a strategically significant business unit recruiting and developing over 500 planners through the AMP Horizons Academy and established Horizons Financial Group in five locations across Australia with over 100 advisers.

Tim holds a Bachelor of Business and recently completed the Advanced Management Program at Harvard Business School.

Tim’s appointment, which takes effect on Monday 4 April 2016, follows Paul Fog’s move into a broader role within NAB Wealth to further the important work on bringing the bank and wealth parts of the NAB Group closer together.

NAB Financial Planning is the salaried financial advice division of NAB. We have 500 planners and specialists providing advice at more than 200 locations across Australia, servicing NAB’s Personal and Business Bank customers.

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The publication provides key information for advisers looking to offer SMAs as part of their advice proposition, including first-hand adviser testimonies and guidance from industry experts.

NAB Asset Management Head of Retail Sales, Jason Huddy said: “Our focus has always been on providing advisers with the right investment insights, solutions and support material to help them deliver successful outcomes for their clients and their businesses.

“We’ve been looking for ways to help advisers understand how to make the most of this growing SMA trend and the latest edition of Benchmark is an important step.”

NAB Asset Management’s SMA adviser education initiatives have included a number of national adviser roadshows, webinars, and the Benchmark website which allows advisers to access a range of resources and tools.

Head of New Product Development Mark Spring said: “While SMAs have been around for some time, many advisers don’t realise the difference they can make to their business.

“By providing them with a hands-on publication with what they really need to know, and a range of supporting resources, we’re looking to give advisers an edge in the competitive advice market place.”

NAB has been providing SMAs since 2009 and has over $1billion in funds under management for investors’ from 13 separate strategies across all domestic asset classes.

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Bernard will join the NAB Asset Management leadership team and provide direction on strategic and operational initiatives.

NAB Asset Management Executive General Manager Garry Mulcahy said: “I am pleased to announce Bernard in the newly created role of COO for NAB Asset Management. Throughout his career Bernard has focused on driving and implementing effective business strategy, and we look forward to benefiting from his broad global experience and insights.”

Speaking of his appointment Mr Reilly said: “The NAB Asset Management team already has a significant footprint in the Australia funds management industry through its investment management and asset consulting capabilities, and I’m looking forward to helping the business take the next step in its evolution.”

Bernard previously spent 24 years with State Street Global Advisors, the world’s second largest asset manager. Bernard’s recent roles include Executive Vice President, Global Head of Strategy and Executive Vice President, Head of Asia Pacific. He has also held roles in Business Development and as Senior Portfolio Manager.

Bernard holds a Bachelor of Economics and is a Chartered Financial Analyst of the CFA Institute.

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Peter Hiom

National Australia Bank (NAB) and ASX have announced that nabtrade, NAB Asset Management and NAB Asset Servicing (NAS) will join the ASX mFund Settlement Service.

NAB is the first major bank to commit to the mFund service, launching by the end of the year.

mFund is an electronic processing service that allows investors to use an ASX broker to apply and redeem units in unlisted managed funds.

NAB will support mFund through nabtrade, NAB Asset Management and NAB Asset Servicing. These areas will provide specialist investment solutions and registry services and, via nabtrade, deliver a key access point for investors.

NAB GM of Self Directed Wealth, Nathan Walsh, said: “Self-directed investors are looking for simple ways to diversify their portfolio. By joining the ASX mFund settlement service, nabtrade is expanding its smarter digital investing capability, giving customers better value and greater access to insights, and a range of investment solutions. This follows the introduction of International Trading and IPOs earlier this year which have received strong interest from self-directed investors and SMSFs”.

Peter Hiom, ASX Deputy CEO, said: “The addition of NAB across the three touch points of broker distribution, funds management and registry, is a key milestone in the development of the mFund service. It’s a strong vote of confidence in the quality of the mFund initiative and even better news for investors.

“NAB’s commitment supports the ASX’s ‘investment supermarket’, providing investors with a broader range of investment opportunities in a cost-effective and efficient manner,” he said.

NAB EGM Asset Servicing, Matt Brown, said the agreement would deliver outstanding results for clients: “This partnership between NAB and ASX further demonstrates our commitment to providing exceptional service for our clients.”

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Andrew Thorburn

NAB yesterday welcomed the Federal Government’s response to the Murray Financial System Inquiry (FSI).

NAB Group Chief Executive Andrew Thorburn said: “We have been strong participants in the FSI process, which importantly aims to strengthen our financial system and make it more transparent and efficient for customers.”

Capital

“We have responded to a number of recommendations on capital adequacy requirements and have taken measures to prepare for this, including the completion of a $5.5 bn rights issue in May.”

Superannuation

“In relation to superannuation, we welcome the determination of the Federal Government to focus on the need for more competition and member choice.”

“NAB has a history of innovation in the superannuation industry including being one of the first super funds to introduce digital advice to our customers two years ago, and we’re committed to recommendations that provide a better customer service for our members.”

“We will work with the Productivity Commission to develop the best model for default superannuation arrangements, which will ultimately lead to better retirement outcomes and returns for consumers.”

Financial advice

“NAB has already strengthened the qualifications of our financial advisers. New NAB financial planners will need to hold a degree qualification and existing senior planners are required to hold a Certified Financial Planner designation or be working towards one. Our submission to the FSI supported a national exam for existing planners.”

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