Big Four Banks To Step Back From Private Equity

Post by NeilMc on August 5, 2009 · Under Australian Economy, Business News, banking · Comment 

Big Four banking groups National Australia Bank (NAB) and Westpac may follow rival ANZ’s lead, and either scale back their Private Equity divisions and activities, or exit from the space all together according to market speculation.

In March ANZ announced that its Private Equity division, ANZ Capital, would no longer add to its portfolio or make any further investments. Industry sources have also speculated that both NAB and Westpac were also considering scaling back their Private Equity activities as a result of higher financing costs.

The Herald Sun quoted an unnamed industry source in its piece as saying “It obviously made good business sense for a bank to be involved in their own private equity fund as a means of increasing exposure to the sector in a strong economy. However, in this environment, they have generally adopted a risk-averse approach and decided it is not the way of the future for them. They would say that private equity isn’t core to their business in this environment.”

A Westpac spokesperson declined to comment, though the Herald Sun, again quoting another unnamed company source, suggested that the lender was changing the focus of its investment to managing them passively, and was not actively seeking new investment opportunities.

An NAB spokesperson said that it had not reduced the number of Private Equity managers, but the same unnamed industry source also suggested that changes were likely.

“Their spin is that they have restructured that section of the bank and repositioned several executives in that area. That basically means they have backed out of that space. They are not investing anymore, so they have shut it down and morphed it.” The source said.

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