In a change of strategy, Australian bank NAB has put its private banking operations into its wealth management segment. WealthBriefing talks to its executives on the changes under way.

Australian banking group NAB started its private bank as a division within business banking earlier this decade. Now, a few years on, NAB has moved the private bank to its wealth management division as part of a change in strategy.

In late May, NAB, or National Australia Bank, announced it was creating a new wealth services division, MLC & NAB Wealth, with the private banking business sitting within it. MLC is one of Australia’s top-ranked fund managers and pension providers, with a long history well before it became a subsidiary of NAB.

Under the new structure, private banking now leverages the wealth management, private client and advisory services of the NAB rather than operating as an add-on to entrepreneurs who are business banking clients.

Angela Mentis, executive general manager of NAB Private Wealth, told WealthBriefing that as the private banking offering evolved and matured, the wealth area of the bank became a “more natural home.”

The change has also come as NAB has widened its private banking offering, a concept which is relatively new in Australia in comparison to the European experience. At its inception, the NAB private bank was focusing on clients with A$1 million in investable assets, in addition to the family home.

Now, these clients are at the entry level of the new client segmentation, which now increases to clients with A$10 million in investable assets, and then to ultra high net worth clients with A$30 million who are served by a new family office.

The family office was recently the focus of widespread coverage from the mainstream Australian media, contrasting the recession with family office services such as the payment of school fees and utility bills, bookings at top restaurants and the use of cars from luxury marques such as Aston Martin and Mercedes-Benz.

“We’ve had a few goes with our private banking offer but I do feel now we’ve brought together all the spectrum of capabilities we require, and that now we can do it as well as the investment banks,” said Ms Mentis.

“And a big advantage, particularly at the moment, is the safety of our balance sheet and a double-A credit rating,” she said.

One of the main issues for a major domestic bank such as NAB, said Ms Mentis, is that traditional private banking clients tended to have “multiple connection points” and use a large number of service providers for their needs.

“High net worth individuals in Australia traditionally wouldn’t just go to a domestic bank, they would spread it around among up to seven or eight service providers,” she said.

“We have all of those capabilities in our bank, so what we are trying to do is to increase the client’s perception of us, and get them to think about partnering with us in a number of areas, from traditional transactions now through to the investment management piece,” she continued.

“Our aim is to see, over time, a decrease in the number of providers our clients have in this wealth management space because we are able to deliver to them what we say we will deliver,” Ms Mentis said.

A key appointment in the new NAB strategy has been that of Philip Kimball as chief investment officer for NAB Private Wealth, a position from which he will dispense the advice on which the new offering will critically depend.

Mr Kimball, a US-born veteran of Asia Pacific markets who joins NAB from Citigroup, aims to leverage all the research and advisory capabilities of the bank and deliver them in a customised way to the different customer segments. Ultra high net worth clients, for example, need and will receive “more institutional treatment”.

Particularly in the current climate, Mr Kimball says he sees risk management as being an intrinsic part of the approach, not just a filter or add-on. He said that already, NAB clients are benefiting from this.

“I’d say that some of our clients are already well ahead of the liquidity curve because of the advice we’ve been able to give them,” he said.

“It means that we’ve been able to protect them, so that now they are able to look at some of the opportunities that are presenting themselves,” Mr Kimball said.

In the view of Ms Mentis, NAB’s strong credit rating and reputation as a “safe” brand are proving an advantage in the current market turbulence. There has been, she says, a “flight to quality” from providers considered more high risk, and this has been to the NAB’s advantage.

“Time will tell but I think there will be a movement from the investment banks back to a safer brand. I think that if those safer brands can connect those clients and can be more close to those clients, then I think we will be successful in changing the perception of us as a provider,” she said. “Our clients are looking to us for leadership and the communication of advice and we have to make sure we can respond to that and use this as a huge opportunity.” 

At stake, she said, is an opportunity to change the private banking landscape in Australia, with major domestic players such as NAB in with a chance to prove themselves to high net worth clients. 

“We’ve got to leverage that opportunity and make sure that we can build that relationship with the client and make sure they stay with us over the long haul because we are making and creating and protecting and transferring their wealth,” said Ms Mentis.

“We need to show the high net worth clients that they can come to us for estate planning, philanthropy,  private custody, investment solutions and advice, and that we can do what we say we will do and deliver.”