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, it held total assets of A$657 billion as of 30 September 2008 and its operating income in 2008 was A$15.4 billion. . It operates across 10 countries serving 8.3 million consumer and business banking customers and over 2.3 million wealth management customers.
NAB operates 1,714 branches and service centres and 2,939 ATMs globally. NAB has a "AA" senior debt rating by S&P.
Core business
The National Australia Bank Group is organised around five key businesses: Australia - NAB, UBank and
MLCMLC is an Australian asset and wealth management company, which was acquired by the National Australia Bank .-Profile:MLC is an Australian Life Insurance and investment company that was purchased by NAB in 2000.- History :...
brands; United Kingdom -
Clydesdale BankClydesdale Bank is a commercial bank in Scotland, a subsidiary of the National Australia Bank Group. In Scotland, Clydesdale Bank is the third largest clearing bank, although it also retains a branch network in London and the north of England...
and
Yorkshire BankYorkshire Bank is a commercial bank in England and Wales, a division of Clydesdale Bank, which in turn is a subsidiary of National Australia Bank. It mostly operates in the North of England, especially in Yorkshire. In 2006 underlying profit rose 16.7 per cent to £454 million compared with a...
brands; New Zealand -
Bank of New ZealandBank of New Zealand is one of New Zealand's largest banks. The first branch opened in Dunedin on 2 December 1861. BNZ is now owned by National Australia Bank....
brand; United States of America -
Great Western BankGreat Western Bank is a high-performing community bank based out of Sioux Falls, South Dakota. There are currently 102 locations in Arizona, Colorado, Iowa, Kansas, Missouri, Nebraska, and South Dakota. Great Western Bank currently has assets in excess of $3.5 billion...
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
MelbourneMelbourne is the capital city and most populous city of the State of Victoria, and the second most populous city in Australia. The Melbourne city centre is the anchor of the larger geographical area and statistical division known as the Greater Melbourne metropolitan area – of which Melbourne is...
. 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 AustraliaSouth Australia is a state of Australia in the southern central part of the country. It covers some of the most arid parts of the continent; with a total land area of , it is the fourth largest of Australia's six states and two territories....
the same year.
Expansion to other Australian states followed, with branches opening in
TasmaniaTasmania is an Australian island and state. It is located south of the eastern side of the continent, from which it is separated by Bass Strait. The state includes the island of Tasmania – the 26th largest island in the world – and the surrounding islands. The state has a population of 500,000 ,...
(1859),
Western AustraliaWestern Australia is a state of Australia, occupying the entire western third of the Australian continent. Australia's largest state and the second largest subnational entity in the world, it has 2.2 million inhabitants , 85% of whom live in the south-west corner of the state.The state's capital...
(1866),
New South WalesNew South Wales is Australia's most populous state, located in the south-east of the country, north of Victoria, south of Queensland and east of South Australia...
(1885) and finally
QueenslandQueensland is a state of Australia that occupies the north-eastern section of the mainland continent. It is bordered by the Northern Territory to the west, South Australia to the south-west and New South Wales to the south. To the east, Queensland is bordered by the Coral Sea and Pacific Ocean...
(1920).
An early branch established in
MauritiusMauritius , officially the Republic of Mauritius, is an island nation off the coast of the African continent in the southwest Indian Ocean, about east of Madagascar. In addition to the island of Mauritius, the Republic includes the islands of Cargados Carajos, Rodrigues and the Agalega Islands...
(1859) closed within a year, but a
London[]London is the capital of England and the United Kingdom. It has been a major settlement for two millennia, and the history of London goes back to its founding by the Romans, when it was named Londinium. London's core, the ancient City of London, the 'square mile', retains its medieval boundaries...
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 GriceSir John Grice was an Australian business man, company director and University of Melbourne vice-chancellor.Grice was born in Melbourne, fourth son of Richard Grice, a Melbourne merchant...
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
Victoria is the second most populous state in Australia. Geographically smallest mainland state, Victoria is bordered by New South Wales to the north, South Australia to the west, and Tasmania to the south, across the Bass Strait. Victoria is the most densely populated state, with over 70% of...
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 interestMinority interest in business is an accounting concept that refers to ownership of a company that is less than 50% of outstanding shares. Minority interest belongs to other investors and is reported on the consolidated balance sheet of the owning company to reflect the claim on assets belonging to...
s 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)
On the 8 September 1834 the
Sydney Herald carried a notice titled "Commercial Banking Company of Sydney" proposing the establishment of a new bank. It began operations on 1 November 1834 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. 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.
1980-2000 merger and rapid overseas expansion
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).
The expanded financial base of the merged entity triggered significant offshore expansion over ensuing years. Representative offices were established in
BeijingBeijing is a metropolis in northern China and the capital of the People's Republic of China...
(1982),
ChicagoChicago is the largest city in the U.S. state of Illinois, and with more than 2.8 million people, the 3rd largest city in the United States...
(branch 1982), Dallas (1983),
SeoulSeoul , officially the Seoul Special City, is the capital and largest city of South Korea. With a population of over 10 million, it is one of the world's largest cities. The Seoul National Capital Area, which includes the major port city of Incheon and most of Gyeonggi-do, has 24.5 million...
(1983, upgraded to a branch in 1990), San Francisco (1984),
Kuala LumpurKuala Lumpur , is the capital and largest city of Malaysia. The city proper, making up an area of , has an estimated population of 1.6 million in 2006. Greater Kuala Lumpur, also known as the Klang Valley, is an urban agglomeration of 7.2 million...
(1984),
AthensAthens , the capital and largest city of Greece, dominates the Attica periphery; as one of the world's oldest cities, its recorded history spans around 3,400 years....
(1984, closed 1989), Frankfurt (1985, closed 1992), Atlanta (1986), Bangkok (1986),
TaipeiTaipei is the largest city in Taiwan and has served as the de facto capital of the Republic of China since the Chinese Civil War in 1949. It is situated on the Danshui River, almost at the northern tip of the island, about 25 km southwest of Keelung, its port on the Pacific Ocean...
(1986 upgraded to branch 1990),
ShanghaiShanghai is the largest city in China, and one of the largest metropolitan areas in the world, with over 20 million people. Located on China's central eastern coast at the mouth of the Yangtze River, the city is administered as a municipality of the People's Republic of China with province-level...
(1988, closed 1990), Houston (1989) and
New DelhiNew Delhi is the capital of India. It is situated within the metropolis of Delhi and serves as the seat of the Government of India and the Government of the National Capital Territory of Delhi....
(1989).
In 1987, NAB bought
Clydesdale BankClydesdale Bank is a commercial bank in Scotland, a subsidiary of the National Australia Bank Group. In Scotland, Clydesdale Bank is the third largest clearing bank, although it also retains a branch network in London and the north of England...
(
ScotlandScotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
) and
Northern BankNorthern Bank, is a commercial bank in Northern Ireland. It is one of the oldest banks in Ireland having been formed in 1824. The bank is considered as one of the "Big Four" banks in Northern Ireland...
(
Northern IrelandNorthern Ireland is a part of the United Kingdom of Great Britain and Northern Ireland and it is situated in the north-east of the island of Ireland. It shares a border with the Republic of Ireland to the south and west...
and
Republic of IrelandIreland is a country in north-western Europe. The modern sovereign state occupies about five-sixths of the island of Ireland, which was partitioned on 3 May 1921. It is a parliamentary democracy and a republic...
) from
Midland BankMidland Bank was one of the Big Four banking groups in the United Kingdom for most of the 20th century. It is now part of HSBC. The bank was founded as the Birmingham and Midland Bank in Union Street, Birmingham, England in August 1836...
. It rebranded Northern Bank branches in the Republic of Ireland to
National Irish BankNational Irish Bank is a commercial bank in the Republic of Ireland, one of the traditional Big Four. In December 2004 Danske Bank agreed to purchase National Irish Bank from the National Australia Bank for GB£967m .It is the fourth largest main street bank in the Republic of Ireland and offers...
and changed both banks' logos from that of the Midland Bank. In 1990, NAB bought
Yorkshire BankYorkshire Bank is a commercial bank in England and Wales, a division of Clydesdale Bank, which in turn is a subsidiary of National Australia Bank. It mostly operates in the North of England, especially in Yorkshire. In 2006 underlying profit rose 16.7 per cent to £454 million compared with a...
(
England and WalesEngland and Wales is a legal unit within the United Kingdom. It consists of England and Wales, two of the four countries of the United Kingdom. Unlike Scotland and Northern Ireland, England and Wales follow the legal system known as English law, and the two form the constitutional successor to the...
).
Further acquisitions followed -
Bank of New ZealandBank of New Zealand is one of New Zealand's largest banks. The first branch opened in Dunedin on 2 December 1861. BNZ is now owned by National Australia Bank....
in 1992, which at the time had about a 26% market share in the New Zealand market, and
Michigan National BankMichigan National Bank was a bank founded in Lansing, Michigan which was established on 31 December 1940 when Howard J Stoddard consolidated six Michigan banks: First National Bank and Trust Company of Grand Rapids, First National Trust and Savings Bank of Port Huron, Lansing National Bank, Battle...
(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
FloridaFlorida is a state located in the southeastern region of the United States, bordering Alabama to the northwest and Georgia to the north. It was the 27th state admitted to the United States...
, and most significantly, the acquisition in 2000 of
MLC LimitedMLC is an Australian asset and wealth management company, which was acquired by the National Australia Bank .-Profile:MLC is an Australian Life Insurance and investment company that was purchased by NAB in 2000.- History :...
(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 AMROABN AMRO is a Dutch bank, currently owned by RFS Holdings B.V., a consortium of Royal Bank of Scotland Group, the Government of the Netherlands, and Banco Santander...
, then in 2001 sold HomeSide's operating assets for US$1.9b to
Washington MutualWashington Mutual, Inc. , abbreviated to WaMu, was a savings bank holding company and the former owner of Washington Mutual Bank, which was the United States' largest savings and loan association until it became the largest bank failure in U.S...
, the largest US savings and loan company, as well as the mortgage unit's loan-servicing technology and operating platform.
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 AuthorityThe Australian Prudential Regulation Authority is a statutory authority, and the prudential regulator of the Australian financial services industry.-Regulatory scope:...
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. In 2006, two former NAB foreign currency options traders were sentenced on charges brought by ASIC - David Bullen for 44 months imprisonment, Vincent Ficarra for 28 months.
Tax evasion and customer overcharging in Ireland
The Irish subsidiary of the bank,
National Irish BankNational Irish Bank is a commercial bank in the Republic of Ireland, one of the traditional Big Four. In December 2004 Danske Bank agreed to purchase National Irish Bank from the National Australia Bank for GB£967m .It is the fourth largest main street bank in the Republic of Ireland and offers...
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. 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". The
Director of Corporate EnforcementThe Office of the Director of Corporate Enforcement in Ireland was set up by the Irish Government on November 28 2001 as a consequence of the proceedings and the conclusions of various review groups, courts, tribunals of inquiry and parliamentary committees in recent years...
subsequently applied to the High Court to have 9 senior managers barred from being an officer of any company.
Turnaround
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.
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
AccentureAccenture plc is a global management consulting, technology services and outsourcing company. It was previously incorporated in Bermuda but since 1 September 2009 has been incorporated in Ireland. It is said to be the largest consulting firm in the world. Accenture is a Fortune Global 500...
. Later that year, it sold
Northern BankNorthern Bank, is a commercial bank in Northern Ireland. It is one of the oldest banks in Ireland having been formed in 1824. The bank is considered as one of the "Big Four" banks in Northern Ireland...
and
National Irish BankNational Irish Bank is a commercial bank in the Republic of Ireland, one of the traditional Big Four. In December 2004 Danske Bank agreed to purchase National Irish Bank from the National Australia Bank for GB£967m .It is the fourth largest main street bank in the Republic of Ireland and offers...
to the Danish
Danske BankDanske Bank is a Danish bank. It was founded 5 october 1871 as Den Danske Landmandsbank, Hypothek- og Vexelbank i Kjøbenhavn ....
. Over 200 additional jobs had been sent offshore by 2006.
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 ExchangeThe New York Stock Exchange is a stock exchange located at 11 Wall Street in lower Manhattan, New York City, New York, USA. It is the largest stock exchange in the world by United States dollar value of its listed companies' securities...
, 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
InfosysInfosys Technologies Limited is a multinational information technology services company headquartered in Bangalore, India. It is one of India's largest IT companies with 103,905 professionals as of Jun 30, 2009...
and Satyam, affecting another 260 employees.
Global Financial Crisis
On 25 July 2008, NAB's announcement of an additional $830 million (
AUDThe Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
) 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.
Growth
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.
UBank operates under NAB's banking license and participates in the Australian government's new deposit guarantee scheme.
Deposits were said to exceed over $500 million in one month.
UBank was reported to be the first beneficiary of NAB's broad ranging technology replatforming project.
UBank is cited as an example of effective use of nontraditional marketing such as
social mediaSocial media are media designed to be disseminated through social interaction, created using highly accessible and scalable publishing techniques. Social media supports the human need for social interaction, using Internet- and web-based technologies to transform broadcast media monologues into...
.
NAB claimed UBank's "customer advocacy and satisfaction levels" to be "amongst the highest of any institution in Australia"
In August 2009, UBank launched a new online savings account ("USaver") that was reported to differentiate through its easy online application process.
In January 2009, Cameron Clyne took over as Group CEO from John Stewart. In June 2009 NAB announced it was to pay A$825m ($660m:£401m) for UK insurer
AvivaAviva plc is the world's fifth-largest insurance group, the largest insurance group in the UK and the second-largest insurance group in Canada operating as Aviva Canada...
's Australian wealth management businesses Navigator. The deal was NAB's first acquisition under Cameron Clyne. NAB beat off competition from
AMP-Science:*Adenosine monophosphate, a nucleotide found in RNA;*Ampere, a unit of electrical current;*Amplifier, a device that increases the amplitude of a signal;*Antimicrobial peptides, immune system peptides;...
for Navigator.
In July 2009 NAB acquired an 80% stake in the private wealth management division of Goldman Sachs JBWere, for A$99m..
In August 2009 NAB announced it's acquisition of the mortgage business of
Challenger Financial ServicesChallenger Financial Services is an Australian diversified financial services company listed on the Australian Stock Exchange. The principal activities of the company are in the following areas:*Mortgage management*Funds management and*Asset management...
for $385 million. This purchase also includes PLAN, Choice, and FAST mortgage aggregation businesses and approximately 17.5% in Homeloans Ltd. 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.
Sponsorship
The National Australia Bank is a major sponsor of
Australian rules footballAustralian football, also commonly referred to as Australian rules football, football, or Aussie rules, colloquially as footy, and historically as Australasian football or Victorian football, is a variant of football played between two teams of 18 players, plus four interchange players, outdoors on...
, both at grassroots and elite level. It supports
AuskickAuskick is a national program in Australia to develop and promote participation in Australian rules football by children. It has proven to be popular with both boys and girls....
, an initiative to improve young footballers, as well as the NAB Cup (an
Australian Football LeagueThe Australian Football League is the major professional Australian national competition in the sport of Australian football and is arguably Australia's biggest sporting competition in terms of membership, corporate sponsorship and attendances .The league comprises 16 teams which play 22 home and...
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 GamesThe 2006 Commonwealth Games were held in Melbourne, Victoria, Australia between 15 March and 26 March 2006. It was the largest sporting event to be staged in Melbourne, eclipsing the 1956 Summer Olympics in terms of the number of teams competing, athletes competing, and events being held.The site...
. 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 RabbitohsThe South Sydney Rabbitohs are an Australian professional rugby league football team based in Redfern, a suburb of South-Central Sydney. They participate in the National Rugby League premiership and are one of nine existing teams from the New South Wales capital...
.
Customer Relationship Management
NAB has received recognition as an early adopter and leader in CRM (
Customer Relationship ManagementCustomer relationship management are methods that companies use to interact with customers. The methods include employee training and special purpose CRM software...
).
It is a large user of the
SiebelSiebel CRM Systems, Inc. was a software company principally engaged in the design, development, marketing, and support of customer relationship management applications. The company was founded by Thomas Siebel in 1993. At first known mainly for its sales force automation products, the company...
CRM software and developed and implemented its "National Leads" analytical CRM system to support its sales force in identifying relevant customer sales & service opportunities.
In 2006, NAB revamped its CRM system having slipped behind other banks investing in CRM platforms using cutting-edge technology.
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.
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.
Key people
Group Managing Director and CEO: Cameron Clyne
CEO of NAB Personal Banking in Australia: Lisa Gray
General Manager NAB Broker: Matt Lawler
CEO of NAB Business Bank in Australia: Joseph Healy
General Manager of UBank: Gerd Schenkel
CEO of Clydesdale and Yorkshire in UK: Lynn Peacock
CEO of BNZ: Andrew Thorburn
President Great Western Bank: Jeff Erickson
Financial summary
| Financial Year |
Cash Profit, $m |
Total Assets, $b |
| 2008 |
4,724 |
657 |
| 2007 |
4,386 |
612 |
| 2006 |
3,782 |
484 |
| 2005 |
3,156 |
423 |
External links