Australia's IOOF to buy NAB's wealth unit for A$1.44b, eyes cost savings

[BENGALURU] Wealth manager IOOF Holdings said on Monday it would acquire National Australia Bank's (NAB) wealth management business for A$1.44 billion (S$1.44 billion), to help save costs and expand its reach.

NAB, Australia's third-largest bank by market capitalisation, decided in 2018 to divest MLC Wealth, but delayed plans due to a management overhaul and a government-appointed inquiry into the financial services sector that found industry-wide misconduct.

IOOF in a statement said it expects the acquisition to be completed by June 30, 2021, and that it would deliver A$150 million of annual pre-tax cost savings by the third full year of ownership.

"The opportunity to acquire a highly complementary business of the quality and size of MLC is compelling. MLC is a natural fit with IOOF and presents a unique opportunity to create value from synergies," IOOF chief executive Renato Mota said in the statement.

IOOF said it would fund about A$1 billion of the deal value through an institutional placement and entitlement offer, while the rest would be via debt, a loan note issued to NAB and existing cash.

In a separate statement, NAB said it would book a post-tax loss of about A$400 million on the divestment.

REUTERS