National Australia Bank (NAB) announced yesterday that it will acquire an 80.1% interest in the private wealth management business of Goldman Sachs JBWere in Australia and New Zealand for A$99 million ($81 million). The wealth management business will be rebranded JBWere and GSJBW will continue to own the remaining 19.9%.
The agreed price suggests 100% of the business has been valued at A$124 million. NAB may also shell out some performance-related payments based on the revenues the business generates over the next three years.
GSJBW referred to the deal as a "powerful strategic alliance" and said the firm's aim was to "meet the evolving and complex needs of private wealth clients".
NAB's group chief executive officer, Cameron Clyne, said in a written statement that JBWere's reputation in wealth management coupled with NAB's footprint in both business and private banking are a great combination. For the six months to March 2009, NAB earned A$1 billion from its business and private banking division, up 7% over the first six months of 2008. The Melbourne-headquartered bank had flagged that weak investment markets had led to lower wealth management revenues.
The partnership envisages GSJBW continuing to distribute certain products to JBWere on an exclusive or preferred basis. JBWere will also continue to have access to investment research and products currently available from GSJBW.
NAB is acquiring a business with more than 22,000 active client relationships, assets under advice in excess of A$38 billion and funds under management of A$10 billion. The price agreed represents 1.24% of funds under management. Some analysts compared the structure to that by which the Royal Bank of Scotland manages its private banking business, Coutts.
The deal is expected to be completed by the end of 2009.
It follows NAB's acquisition last month of the insurance and wealth management businesses of Aviva for A$925 million. NAB's wealth management division, called MLC, had assets under management of A$102 billion at the end of calendar 2008 and was ranked eighth in wealth management.
In March, Clyne told shareholders that growing the wealth management business was a strategic priority for the bank.