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.
Vertical integration under threat? Not according to the CEO of State Plus that came out & stated vertical integration is a good thing via media release echoed in a cut and paste media release from an Ex ASIC Senior lawyer. RC says its bad but if da boyz say its good then its good awrite!!
In the second line it states “”by the end of this year””, but it also states “” in a good position to sell, demerge or separate the scandal-plagued MLC Wealth business by the end of calendar 2019””. I am still learning about marketing, but is this click bait?
Dont worry , that profit will soon be eaten up by ASIC fees costs and enforcable undertakings . Then theirs dealer fees which will go up and many are going independant ,so hows the future looking
For Sale: Hand Grenade, pin missing
love it. so true
Who would want to purchase a vertically integrated wealth management business at a time when the continued existence of vertical integration is under serious regulatory threat?