National Australia Bank has put on hold the divestment and public-markets exit plan of its MLC Wealth, until at least the second half of this calendar year, the company has confirmed.
Fresh from leadership changes at the bank, with chief executive Andrew Thorburn and chair Ken Henry both announcing their departures last week, NAB outlined the delay to the MLC split in a trading update today.
While NAB said its plan to exit the MLC wealth management business had “good momentum under new leadership”, the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry are now known and “bring more clarity to the proposed divestment”.
“The current regulatory and operating environment for wealth businesses remains challenging and a delay of the intended public markets exit of MLC to FY20 is now likely,” the update read.
The delay is part of a “disciplined approach” to the exit of MLC, the update noted. The bank will execute a transaction “at the appropriate time”. It also stated that it planned to retain the flexibility to consider trade sale options.
Former Perpetual chief executive Geoff Lloyd was appointed CEO of MLC Wealth at the end of last year. The announcement by the business to cut its admin fees is expected to be a prelude to further announcements as Lloyd gets closer to outlining his strategy for the future of the business.
NAB’s decision to sell the lion’s share of its wealth business was first revealed when then-chief customer officer for consumer banking and wealth, Andrew Hagger, told Professional Planner the bank was embarking on a “significant transformation program”.
It was exactly one week ago that Thorburn and Henry both followed Hagger’s lead and resigned from the bank. Their exit was preceded by commissioner Kenneth Hayne stating in his final report that the NAB executive team “stands apart” from the three other big banks.
“I acknowledge that the bank has sustained damage as a result of its past practices and comments in the Royal Commission’s final report about them,” Thorburn in a statement. “I recognise there is a desire for change.”
The bank states that the proposed MLC exit “remains subject to market conditions, regulatory and other approvals”, and advises a further update will be provided with NAB’s 1H19 result announcement.
