The or '''nab''' (, , , ) colloquially ''the National'' or ''the NAB''. The NAB is part of the
NAB Group . It is the largest bank in Australia by assets, and 28th largest in the world.
The National Australia Bank Group is organised around three regions: Australia (inc. Asia), UK/Europe and New Zealand. These regional business units include retail banking, business banking, wealth management and ''nabCapital''.
NAB as we know it today was formed in 1981 following the merger of National Bank Limited with the Commercial Banking Company of
Sydney .
In 1858 Alexander Gibb, a Melbourne gentleman, enlisted Andrew Cruickshank, a local merchant and pastoralist, to raise the capital to establish National Bank of Australasia with headquarters in
Melbourne . Cruickshank became its first chairman while Gibbs left after being passed over for the position of General Manager. The bank opened its first branch in
South Australia the same year.
Expansion to other Australian states followed, with branches opening in
Tasmania (1859),
class="copylinks">Western Australia (1866), [[New South Wales (1885) and finally
Queensland (1920).
An early branch established in
Mauritius (1859) closed within a year, but a
London branch (1864), established to handle financing and payment for Australian exports of wool, gold and other commodities, and imports to Australia, was more successful.
National Bank of Australasia was one of many banks that closed its doors during the banking crisis of 1893. Director
John Grice was active in the crisis, from which the bank re-emerged as a public limited company, incorporated on
23 June 1893 .
For the next half century, growth was stimulated by a number of acquisitions:
- Colonial Bank of Australasia (est. 1856) in 1918, bringing additional branches in Victoria and New South Wales.
- Bank of Queensland in 1922, with branches in Queensland, New South Wales and Victoria. The Bank of Queensland was itself result of the merger in 1917 of Royal Bank of Queensland (est. 1886) and Bank of North Queensland (est. 1888).
- Queensland National Bank (est. 1872) in 1948, with branches in Queensland, New South Wales and Victoria.
- Ballarat Banking Company (est. 1865) in 1955
The bank opened a representative office in Tokyo in 1946, later upgraded to a branch in 1985. The bank’s overseas interest expanded more rapidly in the 1970’s. It opened a branch in Singapore in 1971, and representative offices in Jakarta (1973) and Hong Kong (1974). It took
Minority Interest s in merchant banks in these locations at the same time, and in Hong Kong established a 50-50 joint venture merchant bank with Mitsubishi Bank and Trust, but withdrew from these arrangements in 1984. Its first US presence was established in 1977 with a branch and an agency in Los Angeles that it closed in 1993.
The Commercial Banking Company of Sydney began operations on 1 November 1834 and in 1848 was incorporated by an Act of the New South Wales Parliament. Thomas Barker (born 1799 London, England, died 1875 Bringelly, New South Wales), a manufacturer, engineer, politician, landowner and philanthropist was a notable director and chairman.
In 1981, National Bank Limited merged with the Commercial Banking Company of Sydney to form National Australia Bank (NAB).
The expanded financial base of the merged entity triggered significant offshore expansion over ensuing years. Representative offices were established in (1988, closed 1990),
Houston (1989) and
New Delhi (1989).
In 1987, NAB bought
Clydesdale Bank (
Scotland ) and
Northern Bank (
Northern Ireland and
Republic Of Ireland ) from
Midland Bank . It rebranded Northern Bank branches in the Republic of Ireland to
National Irish Bank and changed both banks' logos from that of the Midland Bank. In 1990, NAB bought
Yorkshire Bank (
England And Wales ).
Further acquisitions followed -
Bank Of New Zealand in 1992, which at the time had about a 26% market share in the New Zealand market, and
Michigan National Bank (MNB) in 1995. NAB had earlier rationalized its operations in the US and closed its offices in Atlanta, Chicago, Dallas, Houston, and San Francisco in 1991.
This period of rapid expansion through acquisition concluded with the purchases in 1997 of HomeSide Lending, a leading US mortgage originator and servicer based in
Florida , and most significantly, the acquisition in 2000 of
MLC Limited (and related MLC entities) for $4.56bn, one of the biggest mergers in Australian corporate history.
NAB encountered a difficult period in the period 2000-2005. In 2000, NAB sold Michigan National Bank to
ABN AMRO , then in 2001 sold HomeSide’s operating assets for US$1.9b to
Washington Mutual , the largest US savings and loan company, as well as the mortgage unit's loan-servicing technology and operating platform.
NAB booked two write-downs associated with HomeSide. First, in July 2001, NAB had a $450 million write down of the value of its capitalized mortgage servicing rights (CMSRs) during the quarter ending June 30, 2001, and was the result of exceptionally high mortgage refinance volumes which lowered the value of the CMSRs, combined with a more challenging capital markets environment in which to hedge interest rate risk. This was followed shortly by a second write-down reported in September totalling $1.75 billion; this second write-down consisted of US$400 million from an incorrect interest rate assumption embedded in the mortgage servicing rights valuation model, US$760 million from changed assumptions in the model flowing from the continued unprecedented uncertainty and turbulence in the mortgage servicing market, and US$590 million from writing off of the goodwill. In total, NAB booked $2.2 billion in losses due to HomeSide.
In 2004, NAB discovered that as a result of unauthorized spot trades on its foreign currency options desk, losses totalling million had been covered up. Investigations by
Price Waterhouse Coopers and the
Australian Prudential Regulation Authority highlighted a need for cultural change. The losses were a result of a failed speculative position where the traders falsified profits to trigger bonuses over a number of years. In order to actually generate the reported profits, the traders speculated on the US dollar, betting that it would rise against the Australian dollar and other currencies. This incident led to the resignations of CEO Frank Cicutto and Chairman Charles Allen.
1 In 2006, the two traders most heavily involved in the fictitious trades, David Bullen and Vincent Ficarra, were sentenced to 44 and 28 months jail respectively.
2
The Irish subsidiary of the bank,
National Irish Bank was the subject of a six-year Inquiry carried out by Inspectors appointed by the Irish High Court. They established that National Irish Bank had engaged in overcharging its own customers and tax evasion schemes prior to 1998
3. Mr Justice Peter Kelly, an Irish High Court judge commented following publication of the Report "The edifice of banking is built on a foundation of trust. On the Inspectors findings there was a breach of trust. The operation was carried out over a period of years in a deliberate fashion"
4. The
Director Of Corporate Enforcement subsequently applied to the High Court to have 9 senior managers barred from being an officer of any company
5.
In 2005, NAB announced a cut of 2,000 Australian jobs as part of a global cost-cutting program, with the intention of cutting around 4,200 positions – about 10.5% of its total workforce globally.
6 It began to outsource back office positions offshore, beginning with a pilot with 23 jobs from the accounts payable department in Melbourne going to
Bangalore, India in an agreement with
Accenture .
7 Later that year, it sold
Northern Bank and
National Irish Bank to the Danish
Danske Bank . Over 200 additional jobs had been sent offshore by 2006.
8
By 2006, NAB had turned its fortunes around, reporting an industry record $4.3 billion profit and winning two local Bank of the Year awards.
NAB launched a new division STAR Direct & Alliances to develop and operate businesses serving customers through non-branch channels in 2007.
The National Australia Bank is a prominent supporter of
Australian Rules Football , both at grassroots and elite level. It sponsors
Auskick , an initiative to improve young footballers, as well as the
NAB Cup (an
Australian Football League pre-season competition), the
NAB AFL Rising Star award; and the
AFL National Draft . Other significant sporting sponsorships include the
Socceroos , and the
2006 Commonwealth Games . Support is also given towards community group volunteers around Australia. In recent years, NAB has provided financial support and relief to drought affected farmers.
The NAB is recognized as an early adopter and leader in CRM (
Customer Relationship Management ). It is a large user of the
Siebel CRM software and has developed and implemented its "National Leads" analytical CRM system to support its sales force in identifying relevant customer sales & service opportunities.
910
In 2006, NAB revamped its CRM system having slipped behind other banks investing in CRM platforms using cutting-edge technology.
1112
The NAB has also deployed its National Leads system to New Zealand and United Kingdom. In 2006, NAB was named the winner of the IFS/Cap Gemini Financial Innovation awards for its National Leads system.
13
