National Australia Bank's (NAB's) new chief executive, Mr John Stewart, has signalled that he would consider selling the bank's operations in the Republic and Britain if it would create shareholder value, writes Siobhán Creaton, Finance Correspondent
The bank owns National Irish Bank (NIB) and Northern Bank, as well as the Clydesdale in Scotland and the Yorkshire Bank in Leeds. Mr Stewart, the former head of NAB's UK and Irish banks, succeeded Mr Frank Cicutto as the bank's chief executive at the beginning of February.
In an interview in Australia, he said he was prepared to sell these banks if it was in shareholders' best interests. He added, however, that developing these banks would create most shareholder value at the moment.
The four banks have an estimated market value of as much as £8 billion sterling (€11.8 billion) with assets of £24 billion (€35 billion). In 2003 the banks produced pre-tax profits of £610 million.
Mr Stewart joined NAB in 2003 after a career with the Woolwich Building Society and Barclays, and had been charged with integrating the four banks. The two UK banks have undergone extensive integration since his arrival and the focus had begun to move towards the Irish banks.
Northern Bank, based in Belfast, operates within the UK market and its operations will be more intrinsically linked with the Yorkshire and Clydesdale banks.
In the Republic, NIB has been reorganised but the bank is still embroiled in a High Court investigation into the overcharging of some customers and the sale of unauthorised offshore investments uncovered in 1998.
So far, this investigation, together with the Deposit Interest Retention Tax payment it was forced to hand over to the Revenue Commissioners alongside other Irish financial institutions, have cost €40 million.
That investigation is drawing to a close and a High Court judge has said that he is anxious to ensure that the report of the inspectors investigating the bank would be with the court during the course of the present legal year, which ends on July 31st.
The bank has been told that all written submissions in response to the draft report, which it received last August, must be received on or before March 31st next. Any oral presentation must not be later than April 16th.
Many analysts have questioned NAB's strategy on its UK and Irish banks. NAB has failed to get involved in the wave of consolidation in either of these markets and is a relatively small player, particularly in the Republic.
Some believe that if it does retain these banks in the short term, NAB could continue to operate the various brands and eventually integrate them into one financial institution, possible run from the UK. It is unclear how NIB would fit into this structure.
Some analysts believe the ending of the High Court investigation could prompt NAB to re- think its Irish strategy and could ultimately lead to the sale of NIB.
