NAB looking to domestic clients' needs
National Australia Bank is eschewing the bricks-and-mortar Asian expansion strategy of its rivals, in favour of supporting the investment and trade needs of its domestic customers in the region.
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."