NAB in talks with global firms to solve wealth division downfall

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National Australia Bank (NAB) is reportedly conversing with global financial service companies about potential partnerships in order to free up some of the capital invested in its poorly performing life insurance division.

 NAB has spoken to a number of offshore companies over the past few months in response to its plummeting insurance profits, which dropped 82% last year, reported Australian Financial Review.

This comes after the shock announcement by CEO Cameron Clyne that he will be retiring in August due to the toll the job has taken on his personal life.

The reports that the bank is looking towards a partnership are based on unnamed sources.

Last week banks analyst Brian Johnson of CSLA described the pressured life insurance unit (which sits inside MLC) as “shareholder-value destructive” in a note to clients.

NAB is unlikely to dispose of the life business completely due to the rock-bottom price it may have to accept and the potential impact it could have on its relationships with its customers, the article said.

One solution could be to increase its life reinsurance arrangements in a move that would echo that of Suncorp, which last year secured a reinsurance deal that reduced the life division’s capital requirements.

But if the bank did decide to discharge the insurance division as a whole, AIA and Allianz have both been touted as potential buyers, the report said.

Wealth Professional contacted NAB about the reports but policy does not allow it to comment on market speculation.


SEE MORE:

Big Four CEO stepping down      
NAB restructure sees JANA and MLC merge
Huge reshuffle at AMP                         

  • Mervin C Reed FAICD FChFP on 8/04/2014 5:37:42 PM

    Once the Bankers got hold of MLC they decided to milk it for every dollar and did not invest in product or innovation. They have been losing market share consistently and MLC is the worst of the life companies to deal with. The others particularly TAL are streets ahead. The Board of the NAB needs to get some independent reporting about MLC and not the stuff that they have been fed to date.
    Pity because it was quite a good operation until 3 years ago.

  • F. Sher on 9/04/2014 8:02:29 AM

    It was the purchase of Aviva that was the proximate cause of MLC's struggle. Steve Tucker bought a lemon at a high price

  • Funky Goose on 9/04/2014 9:04:52 AM

    Poor management decisions. Poor service. Treating customers with contempt by reducing costs at their expense.
    Hardly a strong case for giving institutions such as NAB free reign to sell products directly to the public. The regulators need to understand that financial planning is a personal service that involves care and advice that the big institutions are ill equipped to provide. Allowing them to sell product direct to the public will take the industry back 20 years. The argument that cutting costs will automatically result in better returns assumes that customers are rational and will remain invested during all market cycles and will not be influenced by media hysterics. The compare the pair ads do not take into the behavioural finance studies that prove that customers are their own worst enemy when it comes to investment decisions. Putting them in an aged base strategy is also flawed as switching clients into a more conservative portfolio automatically when someone turns 60 say makes no sense if this happens to coincide with a market downturn. These are very obvious issues that are not being given airplay. Yes it will suit the big institutions to depersonalise their product offerings but where is the proof that is in the customers best interest ?

  • Adviser B on 9/04/2014 1:48:22 PM

    To be fair to MLC, they do tend to get about 20% of our transactions correct and completed without error or issue. :O

    You don't want to hear about 80% of the transactions...

  • BC on 10/04/2014 3:04:36 PM

    I couldnt agree more with Funky Goose!
    The banks will totally de personalise financial advice, they have forgotten what (or never knew) what personal service is. Just try and run your SMSF via MLC wrap and you will get my point......Bank product= poor sevice and admin

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