National Australia Bank Ltd (NAB) chief executive Cameron Clyne is watching the changes taking place in the UK financial sector before deciding whether his bank will expand in or exit that market.
The European Commission is forcing UK banking giants Lloyds Banking Group and Royal Bank of Scotland to divest significant parts of their businesses in exchange for government aid, to ensure that they don’t distort the market.
“There is now some talk about the UK market changing,” Mr Clyne said at an Australia-Israel Chamber of Commerce lunch on Monday.
“At the moment it remains speculative but we’re watching it very closely and are very keen to see how it develops.
“We’ve got one of two routes (in the UK) which is to expand or get out.”
The NAB owned Clydesdale Bank and Yorkshire Bank, based in Scotland and Northern England respectively, have a relatively small share of the UK banking market, but came through the global financial crisis without state aid and emerged stronger than many rivals.
NAB, Australia’s biggest bank by assets, has cash available if it does want to expand through acquisition in the UK.
“The best thing we can do in that market is make sure we’re open for business,” Mr Clyne said.
“The pleasing thing in Clydesdale’s case is that its reputation has been enhanced.”
Mr Clyne said Clydesdale had grown deposits at four times the rate of the industry as a whole.
Asked whether NAB would consider buying a company of AMP Ltd’s size in Australia, following AMP and France-based AXA SA’s informal offer to buy AXA Asia-Pacific Ltd, Mr Cameron said the bank didn’t comment on market speculation.
But Mr Clyne did say any expansion, particularly offshore, came second to NAB’s focus on Australia.
“Australia is our core market and that is what we’re focusing on,” he said.
“The better we do here, the more we can consider offshore markets.”
Melbourne-based NAB also owns US-based Great Western Bank, which has operations based in the Mid-Western states such as Iowa, Colorado and Kansas.
Mr Clyne said NAB needed to be able to offer something different when expanding offshore.
“If we are going to go offshore, what is the point of differentiation with other players and how are we going to grow,” he said.
Shares in NAB closed down 29 cents, or 1.01 per cent, at $28.40.