NAB's natural partner

It has been obvious for a long time that Goldman Sachs was somewhat less enamoured with the private client business it inherited when it merged its Australian operations with JB Were, than the previous owner had been – the old JB Were regarded its private clients as a source of considerable strategic advantage.

The investment bank had already pruned its advisory team to focus on clients with high net worth, creating some dissatisfaction in the ranks and leading to the formation of Evans & Partners, a kind of home for JB Were refugees.

Now it has sold an 80.1 per cent interest in the Were private client business to National Australia Bank, essentially quitting the retail business on which the house of Were was originally built to focus on investment banking and institutional broking.

That separation makes sense for both Goldman and the advisory business. Goldman doesn't have a retail broking franchise elsewhere and at a time when the private wealth sector is consolidating – witness the massive Citi/Morgan Stanley joint venture unveiled earlier this year – scale, technology and the ability to offer holistic wealth management services is becoming increasingly important.

NAB, with its big private wealth and private banking business — and an historic close relationship with the old JB Were – makes the most natural partner for the business.

The residual 19.9 per cent equity and a strategic distribution relationship will provide continuing access for Goldman to the renowned Were retail distribution capabilities – it has been said in the past, not quite in jest, that Were could have handled the entire Telstra privatisation within its own client base.

Banks traditionally haven't made much of a fist of stockbroking. NAB itself had a failed entry to the sector with its acquisition of another venerable Melbourne firm, A.C.Goode & Co in the 1980s.

However, the Were private client business is a wealth management advisory business, with more than 200 advisers, assets under advice of more than $38 billion and funds under management of about $10 billion. It fits more neatly into NAB's wealth management strategy, with the transactional elements of the business left with Goldman.

NAB's Cameron Clyne, with the Aviva acquisition, has made it clear that growing NAB's wealth management presence and capabilities is a strategic priority. NAB has an underweight retail banking business but a very strong private banking operation that Clyne appears keen to build further.

Were, which will remain a distinct business and brand, will buttress the strategy by bringing more than 22,000 high net worth clients within the NAB fold.