NAB looking to domestic clients' needs
As its rivals rush to Asia, acquiring strategic stakes in local banks and building branch networks, NAB has adopted a different strategy, explains the bank's chief executive officer for Asia, Spiro Pappas.
"Our approach focuses on [the thinking] that investment and trade flows with our corporate and business customers, which means we don't need to have a vast footprint in the region," he said.
"We have a deliberate policy of targeting their Asian agenda."
Mr Pappas shied away from criticising the competitors by name but chose to highlight the limitation of the Asian expansion strategies of the bank's peers.
"A bricks-and-mortar approach in China can only take you so far. I think Standard Charter has been in Asia since the 1840s and they just celebrated their 100th branch," he said.
"To put that in perspective, the largest bank in China has more than 10,000 branches."
NAB's reluctance to grow its business in Asia through acquisition is also partly motivated by its painful experience in Britain, where it bought Clydesdale and Yorkshire banks at the top of market. They have become a drag on the group's performance.
"There is a real lesson for all of us," said Mr Pappas, who was a senior banker with ABN Amro before he joined NAB in 2009 as the head of the institutional bank.
Mr Pappas said he hoped to grow the bank's business in Asia on the back of ever expanding ties between Australian customers and the region.
"The growth is challenged for a lot of industries in Australia, so where is the growth going to come from?" he said. "Asia is one of, if not the biggest, avenues for Australian corporates to focus on."
NAB's surveys of its business clients - from small manufacturers to multi-national mining giants - showed ever greater appetite for Asian expansion, he said.
"At SME level, they are becoming Asia-active [25 to 30 per cent] and at large corporate level they are very Asia-active [50 per cent]," said Mr Pappas, citing a NAB survey.
NAB is taking its corporate clients, including Woolworths, to Asia to tap into investment markets. The bank is also attracting Chinese, Indian and Japanese capital into industries such as infrastructure, renewable energy, food processing and manufacturing.
It is even helping wine and milk powder producers to negotiate distribution channel agreements.
Mr Pappas said NAB had won more than $30 billion in formal advisory mandates for infrastructure and natural resources projects, more than the other three big banks combined.
One area of focus for NAB in Asia is targeting the wealth management needs of a bulging middle class and a rapidly ageing population. NAB's brand had not been damaged by the global financial crisis, Mr Pappas said.
"A lot of fund managers and investment banks from Europe and the US have gone into Asia and sold wealthy Asians a lot of products that have blown up in their faces."
Frequently Asked Questions about this Article…
NAB (National Australia Bank) is avoiding a large bricks-and-mortar expansion in Asia. Instead of building branch networks or buying local banks, NAB focuses on supporting the investment and trade needs of its Australian corporate and business customers that are active in Asia.
The article explains NAB’s caution stems partly from its painful experience in Britain, where buying Clydesdale and Yorkshire banks at the top of the market became a drag on performance. That experience makes NAB wary of acquisition-led expansion in Asia.
NAB helps corporate clients — from SMEs to large multinationals — by connecting them with investment markets in Asia, attracting Chinese, Indian and Japanese capital into sectors like infrastructure, renewable energy, food processing and manufacturing, and negotiating distribution agreements for products such as wine and milk powder.
NAB’s surveys show increasing Asian activity: about 25–30% of SMEs are becoming Asia-active, and roughly 50% of large corporates are very Asia-active, indicating growing appetite among Australian businesses for Asian expansion.
NAB is targeting infrastructure, natural resources, renewable energy, food processing and manufacturing. The bank says it has won more than $30 billion in formal advisory mandates for infrastructure and natural resources projects — more than the other three big banks combined, according to the article.
NAB is focusing on wealth management needs tied to Asia’s bulging middle class and rapidly ageing population, positioning its services to meet demand for retirement and wealth solutions in those demographics.
According to NAB’s Asia CEO Spiro Pappas, the bank’s brand was not damaged by the global financial crisis, which he suggests positions NAB favorably as some fund managers and investment banks from Europe and the US lost trust by selling risky products in Asia.
For everyday investors, NAB’s strategy signals a focus on leveraging Australian clients’ trade and investment flows into Asia rather than costly branch expansion. This client-driven, advisory and capital-raising approach targets sectors with real demand from Asia and reflects caution around acquisition risk — factors investors may consider when evaluating NAB’s growth prospects in the region.
Call 1300 880 160
Start a chat
Schedule a call
