National Australia Bank Poised for UK Acquisition Spree

Strategic Insights -

The Australian financial group is preparing to enter the UK market aggressively, with Abbey National emerging as its first potential takeover target. National Australia Bank is seeking a separate stock market listing for its European operations, which include Clydesdale Bank, on the London stock exchange. This dual listing will provide the bank with a stronger currency and access to a global investor pool, paving the way for acquisitions in the UK.

Key Takeaways:

  • National Australia Bank is planning a UK acquisition spree, with Abbey National as its first potential target, valued at least £13.5 billion.
  • The acquisition of Abbey National would significantly bolster National Australia's presence in the south of England and represent a significant addition to its regional banks in the UK and Ireland, worth around £3 billion.
  • National Australia Bank may raise additional funding by selling off its US subsidiary, Michigan National, which has been one of its star performers and is highly valued as a listening post for the US market.
  • The bank's dual listing will give it legally distinct securities listed in London and Australia, with arrangements to give its existing shareholders complete exposure to the group's assets.
  • Analysts are relieved that National Australia Bank has shelved plans to acquire AMP, which has been struggling after its takeover of insurance group GIO.
  • National Australia Bank's acquisition of MLC last year marked its first big buy and catapulted the bank into third place among Australian fund managers.

Statistics:

  • National Australia Bank's European operations are valued at around £3 billion.
  • Abbey National is expected to command a price of at least £13.5 billion.
  • Michigan National has been one of National Australia's consistent earnings drivers since its acquisition for US $1.5 billion in 1995.
  • National Australia Bank's market capitalisation is around $60 billion.
  • Commonwealth Bank of Australia paid $3 billion for Colonial, parent of Scottish Mutual, last month.
  • National Australia Bank holds around 10% of the Australian fund management market.

Sources:

  • National Australia Bank press release, citing CEO Frank Cicutto.
  • Interview with John Wright, CEO of Clydesdale Bank.
  • Banking sources in the US, citing Chase Manhattan as potential acquirer of Michigan National.
  • Australian Prudential Regulation Authority and the UK's Financial Services Authority.
  • Retail Banker International newsletter.
  • Statements from analysts Craig Williams, Merrill Lynch, James Falkiner, HSBC, and Jesse Jillings, HSBC.