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Incoming CBA Chief Reshuffles Senior Executive Deck
Ian Narev, incoming chief executive of Australian banking major Commonwealth Bank of Australia is getting set to make his imprint on Australia’s largest bank by reshuffling the lenders top executives.
After being named as chief executive designate of CBA, Mr. Narev’s first major announcement was the appointment of Grahame Peterson to the position of running the lender’s business and private banking units, which were formerly run by Mr. Narev himself. Mr. Peterson’s previous responsibility was running CBA’s wealth management operation.
Taking over from Mr. Peterson at Wealth Management is Annabel Spring, whose previous responsibility was as head of strategy for CBA, with Robert Jesudason a former investment banker with Credit Suisse named as her successor.
Mr. Narev will assume the role of chief executive of CBA on December 1st, when present incumbent Ralph Norris retires.
“Grahame is a highly experienced executive who is widely respected within the group and in the financial services market more broadly,” Mr Narev said.
The Business banking unit is CBA’s largest business after retail banking, though it lags behind NAB, which is widely considered to be the dominant player in the segment.
The appointments of Ms Spring and Mr. Spring to new roles at CBA are interpreted as being promotions. Ms Spring earned her stripes as a Wall Street executive with Morgan Stanley, before joining CBA in 2008.
Ms. Spring’s ascension into Wealth Management is considered positive for her, though some have noted that it will be her first client facing role. Ms. Spring is said to have engineered the recent purchase of Count Financial for $373 million by CBA, a unit she will now oversee as part of her new responsibilities.
Mr. Jesudason has a similar background in investment banking, after having worked at Barclays, JP Morgan, and Credit Suisse. At the latter Mr. Jesudason was a Managing Director at the financial institutions group responsible for emerging markets at the Hong Kong office.
He advised CBA in its 2008 acquisition of Bankwest in 2008, which itself was engineered by Mr. Narev, whom at the time was head of strategy at CBA.
Mr Narev said the appointment of a senior investment banker would help CBA “maintain a global perspective in assessing the impact of these uncertain times and also benchmark itself against the practices of leading global banks”.
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ASIC Proposes Health Risk Warning For Retail Investment Products
The Australian Securities and Investments Commission says that investments and financial products should come with warnings in the same way products such as cigarettes come with warnings that they pose health risk.
The corporate regulator has outlined a set of new guidelines designed to regulate the way companies advertise financial products. The guidelines are part of the regulators attempt to crack down on advertising which is designed to market riskier retail derivative products.
Greg Medcraft who is the current chairman of ASIC says that investors should be made aware of the consequences of investments made in riskier financial products.
“I think it’s important that advertising be balanced, particularly in financial products,” he said.
“It’s almost important to have a health warning, but there’s consequences as well with some particular financial products.”
ASIC says it would like to see financial services companies engaging in a more balanced form of advertising.
According to Mr. Medcraft some evidence exists that certain consumers to take decisions based purely on advertising of the financial product.
“What’s important is to make sure that advertising is actually fair and that it’s balanced and that advertisements don’t just talk about the benefits of financial products, but that they do try to address the risks in financial products,” he said.
Mr. Medcraft singled out derivatives aimed at retail investors as a specific area of focus for the corporate watchdog.
“One sector that we’ve had to take a number of actions is in the retail derivative space,” he said.
“And I think often by definition that’s a very complex financial product, so it’s where there is obviously a high need to make sure that consumers do understand what they’re buying.”
The ASIC Chairman called on the Media to police their advertisers and ensure that they followed the guidelines.
“These are best-practice principles and I would expect that most media outlets would want to adopt best-practice principles,” he said.
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CBA Reveals Ambitious Strategy For Wealth Management
Australian banking major CBA has announced an ambitious plan to become an incumbent in the segment for self managed superannuation funds, after agreeing to purchase the listed financial planning network Count Financial for $373 million.
The deal was struck after the lender asked its advisers to seek out potential targets that would serve to build its wealth management offering, which currently includes Colonial First State.
The transaction has been approved unanimously by the Count Financial board independent directors.
Barry Lambert, Count Financial’s founder will pocket as much as $75 million from his 17.8 per cent stake sale, which will be sold to CBA. His family members own a further 20 per cent, and all have indicated that they will support the deal.
Graeme Peterson, who runs CBA’s wealth management businesses says that the lender is keen on building its self managed super fund business, which is much weaker than its broader super and fund management business.
The transaction means that CBA will emerge with a financial planner network of 1850, taking it to second spot behind the merged AMP AXA entity, but ahead of rivals ANZ and NAB.
“It’s all about accessing a high-growth industry,” Mr. Petersen said. “SMSF is growing at about 10 per cent per annum.”
“CBA does very well in asset management,” Mr. Petersen. “We have wholesale relationships and in the retail super area we do very well. The next part is SMSF and we are there with CommSec.
“But there are a whole range of people who do their own super through their accountant and then say: ‘Well what do we invest in?’ “
The lender says it will continue to support the Count Financial brand, as well as its national office network, and adviser network.
According to Mr. Peterson, CBA’s strategy for wealth management remain unaffected by the reforms proposed by the government, which have been drip fed over the last few months, and focus on integrity of the industry.
“We went looking for them. We had to convince Barry and the board. They didn’t put up the white flag because of FOFA,” he said.
ANZ Reported To Seek Acquisition In Japan
After US Private equity player Lone Star funds put up its distressed Japanese lender Tokyo Star Bank for sale last month, Australian banking major ANZ is reportedly interested in acquiring a strategic stake in the troubled lender.
Market watchers believe that it is more likely that ANZ will seek to acquire a stake in TSB as opposed to healthier rival Aozora Bank, which according to a report in The Australian Financial Review is also a target for Melbourne based ANZ.
ANZ remains eager to raise its profile after it failed to acquire a controlling interest in another Lone Star Funds portfolio company Korea Exchange Bank last year.
Earlier in the year ANZ chief Mike Smith said that the “massive liquidity pools” in Japan, made acquiring a lender in that market an attractive option.
ANZ sought to acquire a 51 per cent stake in KEB, however the lender was outbid by Hana Financial Group, another Korean financial services firm, it is thought that its attempt to acquire a strategic stake in a Japanese lender may be more fruitful.
In July, Lone Star began preparing to divest its stake in TSB, and asked a number of investment banks to put forward proposals for a potential sale.
TSB is a mid-sized lender with a 31 strong branch network in the country and has reported two consecutive full year losses. In its most recent full year the lender reported a loss of $55.3 million for the year ending 31 March 2011.
The mid-sized commercial bank has 31 branches in Japan and has notched up two years of annual losses which widened to 4.5 billion yen ($55.3 million) in the 12 months to March 31, 2011.
Creditors of TSB, which include Lone Star, Credit Agricole, Aozora and Shinsei Bank’s took control of the lender when TSB defaulted on an interest obligation.
Analysts do not believe that ANZ will aggressively bid for the stake that is put up for sale, unless the asset is priced cheaply, nor do they expect ANZ to seek 100 per cent control of the lender. ANZ is more likely to seek to obtain a strategic stake in the lender, which is in line with its previous acquisitions in Asia.
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