National Australia Bank unveils new structure to focus at home

[SYDNEY] National Australia Bank, the country's No 1 lender, on Friday announced a top management shake-up and restructuring to reverse declining market share in Australia and New Zealand, leading to the departure of three senior executives.

After exiting struggling UK operations and selling a controlling stake in its life insurance business, CEO Andrew Thorburn is under pressure to boost growth at home where NAB has underperformed its three big rivals in recent years.

"To me this is another sign of the ongoing transition of NAB to an Australia and New Zealand-facing business," said Simon Burge, chief investment officer at Above The Index Asset Management.

Three senior executives - Michaela Healey, Gavin Slater and Renee Roberts - will leave the bank as a result of the restructuring. A NAB spokeswoman said there would not be any job cuts as a result of Friday's announcement.

Investors shrugged off the changes, with NAB shares falling 1.12 per cent in a weak Australian market, tracking the broader banking index.

Australia's largest business bank has consistently lost market share in business lending from nearly 25 per cent in 2012 to 22 per cent in March 2016. Market share in home loans also dropped during the period.

More nimble online rivals as well as foreign players such as Chinese and Japanese lenders are rapidly expanding their loan books in Australia, leading to tighter margins and falling revenues for the established majors.

NAB is not alone in reshaping its business. No 4 lender Australia & New Zealand Banking Group is restructuring its Asia business after announcing management changes in January, while No 3 Westpac Banking Corp last year split its profitable retail and business banking division in an organisational reshuffle.

The moves come at a time when Australia's "Big Four" banks - NAB, ANZ, Westpac and Commonwealth Bank - are preparing for a new era of slowing growth and rising loan losses after years of record profits.

"The time was right to refresh the executive leadership team after two years during which the team had worked to address major legacy issues and re-focus the bank on the core Australian and New Zealand business," Mr Thorburn said in a statement.

Among the changes announced on Friday, the bank will create three main customer-facing divisions - one for small businesses, a second for large corporates and international branches and a third for retail banking and wealth.

The heads of each of these divisions will report directly to Mr Thorburn.

"It looks like they are focusing more on corporate and mid-market lending, moving away from the institutional piece where the (regulatory) capital requirement is going to go higher," said Omkar Joshi, who helps manage A$1 billion (S$1 billion) at Watermark Funds Management.

NAB shares have lost nearly 11 per cent so far this year as investors dump bank shares.

REUTERS