NAB well-placed to sell MLC wealth business

In a research report this week, Morningstar analyst David Ellis delved into NAB’s latest announcement of $314 million in costs for customer remediation matters.

Mr Ellis had anticipated NAB’s announcement following similar statements from ANZ and CBA in recent weeks.

“Refunds and compensation to customers in the wealth business, covering adviser service fees, plan service fees, wealth advice reviews and other wealth-related issues, is the main contributor,” the analyst noted.

“The customer refunds and compensation assessments were prompted by the reputation-damaging royal commission, and we are disappointed the bank had not more promptly identified and resolved these serious breaches of customer trust.”

However, Mr Ellis believes shareholder capital has not been significantly damaged by these events and Morningstar is confident that NAB “is in a good position to sell, demerge or separate the scandal-plagued MLC Wealth business by the end of calendar 2019”.

NAB recently appointed former Perpetual CEO Geoff Lloyd as head of MLC Wealth. The business reported a first-half fiscal 2018 NPAT of $102 million.

The major bank announced in May that it will divest its MLC business as part of a plan to “reshape” its wealth management businesses.

“This involves an intention to pursue an exit of the advice, platform and superannuation and asset management businesses, currently operating under the MLC and other brands,” said NAB.

“Separation is targeted by the end of the 2019 calendar year, subject to market conditions and the required approvals.”

NAB will retain its JBWere and nabtrade businesses.