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ANZ CEO says running two banks is inefficient and he wants ANZ and National to run as one bank; brand issue still being debated

ANZ CEO says running two banks is inefficient and he wants ANZ and National to run as one bank; brand issue still being debated

By Bernard Hickey

ANZ Chief Executive Mike Smith has signalled he would like to see both ANZ and National Bank customers able to use the banks as one bank because operating as two separate banks is inefficient.

Smith's comments come as ANZ reviews its use of the National brand, which includes the black horse and green colours still owned by Lloyds TSB despite the NZ$5.71 billion sale of National to ANZ in 2003.

NZ CEO David Hisco confirmed earlier this month that ANZ aimed to complete a review of its use of the National brand in New Zealand by the middle of this year, although he rejected outright a report that ANZ would close National's branches. See our earlier article and video here. ANZ's rights to use the Lloyds black horse on a green and white background had been due to run out at the end of last year. However, ANZ renewed the agreement until the end of 2014 last year prior to Hisco replacing Jenny Fagg as ANZ NZ CEO.

Meanwhile, Smith told in an interview in Sydney that ANZ had to run more efficiently in New Zealand as one bank, rather than two.

ANZ bought National 8 years ago, but kept both brands and aimed to 'run two restaurants from the same kitchen', sharing back office services but having two sets of branches and front office staff.

"We've got to run it far more efficiently. We've got two banks where we should have one bank which both sets of customers can use. At the moment we have two of everything, so that is clearly inefficient," Smith said.

ANZ announced last November it planned to shut down ANZ's IT platform in New Zealand and adopt the National Bank's Systematics core banking system by later this year at a cost of NZ$220 million. See Gareth Vaughan's article here.  ANZ also last month announced a management restructure in New Zealand to pull together its commercial and rural divisions into one operation and shed up to 15 management roles and 30 back office roles. The rural division had been run as a National bank arm. See our earlier article here.

Smith said ANZ was absolutely committed to New Zealand.

"It's a business we want to grow. It's one of our major domestic franchises and we don't take that lightly, and we would like to see growth coming out of New Zealand," he said.

Asked if ANZ would continue with two brands or with one, Smith said: "The branding is on the table and we're now discussing it, and we have to come to a decision fairly quickly because the brand we have, which is the horse, is not ours for very long. That belongs to Lloyds Bank, which is owned by the British government."

Earlier at an ANZ strategy session for analysts on ANZ's domestic operations in Australia, ANZ's Australia CEO Philip Chronican indicated ANZ preferred a single brand strategy in Australia.

Chronican, a New Zealander and a former 27 year banking veteran with Westpac, joined ANZ in November 2009.

Asked by analysts whether ANZ would copy the strategies adopted in Australia by National Australia Bank and Westpac of using discount online or regional brands that were different from the national brand, Chronican was sceptical and referred to the issues ANZ was having in New Zealand.

"The frustration we've had there is we haven't clearly delineated where one brand stands versus the other," he said, referring to ANZ and National.

Chronican said ANZ was not doing any strategy work about running separate brands in Australia.

Super regional strategy

Meanwhile, Smith detailed how ANZ and National customers could use ANZ's Super Regional strategy to expand into and transact with the fast-growing regions of North and South Asia.

Smith moved from HSBC to run the ANZ Group in November 2007 and has been the architect of ANZ's Super Regional strategy to grow ANZ in the fast-growing Asian markets, including China, Indonesia, Cambodia, Vietnam and South Korea.

"The Super Regional strategy is about giving access to people in New Zealand and Australia the opportunities that are going on in the rest of the region, predominantly in Asia. Asia is now the driver of global growth and it will be for the rest of this century and the next century as well, probably," Smith said.

Growth in New Zealand and Australia was going to be quite low and lower than before the Global Financial Crisis, he said.

"Therefore the upside is going to come from those economies in Asia. Our strategy is about linking those opportunities together. It's the connectivity we can create," he said.

Smith said the Super Regional strategy was not just about connecting New Zealand customers to China or Australian customers to Vietnam. It was also about connecting Chinese customers to those in Vietnam and Australia customers to those in New Zealand.

Bigger companies operating internationally such as Fonterra understood the value of such a strategy, he said.

"It's also very important for these small businesses because these markets are providing manufacturing, services and you can source things. There's all sorts of other opportunities," he said.

Individual customers would also use the wider network as students moved between countries and tourism grew, he said.

"People tend to forget we have still have positive migration in New Zealand and Australia from Asia, We have a huge amount of education flow and that will continue to grow and something we need to work on," Smith said.

"As Asia becomes more affluent and people get more disposable income. Where are they going to go on holiday? New Zealand is one of the most beautiful places on earth and you've got a massive population who want to go and explore these places so I think it's a huge opportunity."

Smith said ANZ could help smaller businesses work with those in Asia in a variety of ways.

"Say you wanted to set up a manufacturing business in Cambodia or in Vietnam because that was going to be much cheaper. We can finance that because we can be both ends. We look after you in New Zealand and we can look after you in Cambodia."

Trans-Tasman links

Smith said ANZ also wanted to improve banking links between Australia and New Zealand.

"That transtasman link is not as smooth a link as it should have been. It is crazy that if you have an account in New Zealand at a branch in Auckland and you want to set up an account in Melbourne, you've got to go through a massive compliance process. If we know you in Auckland why can't we just do it automatically?"

* Bernard traveled to Sydney for an ANZ conference on the Renminbi courtesy of ANZ.

* This article was first published in our email for paid subscribers this morning. See here for more details and to subscribe.

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What a joke. As if ANZ hasn't planned all along to wipe out the National brand. Anyone remember the Westpac aqusition of Trustbank? The token name of WestpacTrust was used long enough for it to be quietly be removed.


Good marketing plan...

Run down the good bank (NBNZ) to the level of the bad bank (ANZ), & with few customers left at the good bank, you can easily combine the two :-)


Which one is a good bank . They are both lemons.


One interesting thing pointed out to me by a twitter follower is that National Bank has dropped its very long term sponsorship of Country Calendar. It's now with Hyundai.

Can anyone else recall if there are any National sponsorships out there that last beyond this year?




Yes the Black Caps likely to be ditched completely . Now who would be stupid enough to put their brand behind that lot.


It's interesting too (and sort of ironic) that National Bank's customer satisfaction rating is rising and is significantly higher than ANZ Bank's in NZ.

Here's the latest Roy Morgan survey




And here's FinSec's response. The union wants to be consulted.

Here's their statement:

Bank workers’ union Finsec welcomes ANZ National NZ CEO David Hisco’s rejection today of media reports that ANZ would close National’s branches, but said that the bank is clearly signalling merging the two brands.

“Hisco’s assurance that National bank branches won’t close will come as a relief to bank staff and customers,” said Finsec Campaigns Director Tali Williams. “But Australian CEO Mike Smith’s comments that running two banks is “inefficient” is further evidence that a big decision on the branding of the banks is under consideration.”

“We have told the bank in no uncertain terms that consultation needs to be undertaken before a decision is made on the future of the National Bank. That means talking to Finsec as the representative of staff, but also to their customers and the wider community and taking all these views into account.”

“ANZ National would be placing their business at risk if customers and staff feel that the change is a fait accompli,” said Williams. “When the bank’s profits are growing, they would find it very difficult to justify to the New Zealand public any cuts to customer service or local jobs.”

Williams said that the protection of jobs and customer service would be central to Finsec’s ongoing discussions with the bank about the future of the National Bank.


Excellent Call . The NZ market is well over Banked and the aggregation of the two Brands needs to be implemented without too much delay.

Too many lame ANZ & NBNZ executive cluttering up the workplace adding no value in terms of productivity.

Service in both institutions is shocking.

My suggestion for a new logo ... A Prancing Jacob Oram . He is a real show pony.