Australian Bank Slashes Dividend, Does Not See Mass Job Cuts - Report

Tom Burroughes

13 March 2009

National Australia Bank, which includes a wealth management operation, will cut its dividend for the first time in 18 years and restructure its institutional business to secure the bank against the economic downturn, but does not anticipate mass jobs cuts, according to the Canberra Times.

New NAB chief executive Cameron Clyne signalled yesterday he wanted to adopt a stronger focus on the group's businesses in Australia, where the economy is faring better than others, the publication said. Mr Clyne said NAB will intensify its focus on its Australian franchise by growing its flagship business bank, leveraging recent investments in its retail bank and pursuing cost synergies in wealth management by merging its private bank and private wealth units.

In setting out his strategic agenda as bank head, Mr Clyne also reaffirmed the bank's commitment to its British operations, which are facing some of the toughest conditions seen in that country in decades.

NAB became the second big bank to signal a dividend cut, after Mr Clyne said the first-half dividend would be slashed by 25 per cent due to the challenging market environment. Rival ANZ said last month it would cut its full-year dividend by 25 per cent to conserve free cash.

The dividend decision means Mr Clyne becomes NAB's first chief executive to reduce its dividend since 1991. The bank could boost revenue by A$1 billion ($652 million) by ratcheting up its cross-selling activities, while the retail arm could benefit from better targeting of high net worth customers.