By Gareth Vaughan
Rivals have been quick out of the blocks targeting National Bank customers as soon as the country's biggest bank, ANZ New Zealand, confirmed the worst kept secret in New Zealand banking, - the death of the National Bank brand.
Adverts from rival banks' appeared on television last night and in this morning's newspapers specifically targeting National Bank customers. The move comes as ANZ New Zealand CEO David Hisco pledges the biggest thing National Bank customers will notice, as the bank's brand is phased out over two years to be replaced with ANZ, is a change in colour from green to blue. Hisco said what he described as the new ANZ would work very hard to keep its customers.
A full page advert in this morning's NZ Herald from TSB Bank started out with "Dear National Bank customers." It went on to say: "How do you tell your new bank what you think of their behaviour? Make them your old bank. We thought it might be a good time to introduce you to the country's largest independent bank."
And in its own full page advert Kiwibank said: "It's your choice. We back every Kiwi's right to choose who they bank with. Join us at Kiwibank..."
In an email sent to National Bank customers signed by Hisco, ANZ says by bringing the brands together it'll be able to do more to help customers than either brand could do on its own.
"We’re combining the National Bank’s track record of outstanding service, award-winning products and great internet banking, with ANZ’s size, reach and specialist expertise. Quite simply we are taking the best of both the National Bank and ANZ to build the new ANZ. Our commitment to providing great customer service won’t change," the email to customers says.
"The staff you deal with will continue to serve you just as they do now. In fact, more recently we've introduced the National Bank service model to ANZ to ensure all our customers enjoy the same outstanding service. As a National Bank customer, you’ll find most things stay the same. All the things you value from the National Bank will be part of the new ANZ."
A long time coming
The end of the National Bank brand will be phased in from next month as ANZ adopts National Bank's IT system, at a cost of at least NZ$221 million, some nine years after ANZ's acquisition of the National Bank from Britain's Lloyds TSB. ANZ announced its National Bank purchase, for A$4.915 billion in October 2003. That price excluded a dividend paid to Lloyds of NZ$575 million from National Bank's retained earnings. ANZ said then it intended to retain both the ANZ and National Bank brands for retail and small business customers subject to a trademark agreement. The group's rural business would operate under the National Bank name.
Last year ANZ renewed its rights to use the Lloyds black horse on a green and white background as the National Bank logo until the end of 2014.
With the switch to one IT system and the rhetoric from both Hisco and his boss, ANZ Banking Group CEO Mike Smith, over the past couple of years, it has been a question of when, not if, the National Bank brand would go. In a media conference yesterday evening Hisco said ANZ NZ's board had just agreed to the move, with the company’s legal name set to become ANZ Bank New Zealand Ltd.
Hisco said the new ANZ would work very hard to keep its customers.
"We've got two million customers and I think people's first reaction when they hear news like this is 'what does it mean?' And often people don't necessarily like change," Hisco said.
"But when they get the chance to talk with our staff, and when they realise that the person they deal with is still going to be there tomorrow, and our people take them through the logic of it, and they end up hearing that really it's the same person in the same place, (the) same products, same technology and it's just a different colour, we'd hope that logic will prevail."
"We're going to work very hard to keep our customers and at the same time we've got a tremendous proposition here."
"I believe our front line (staff) will work really hard to make our customers understand that they're still there and we really want to keep their business," Hisco added.
No goodwill write-down
Hisco confirmed what interest.co.nz has previously reported, that there's no need or plan to write-down the about NZ$3.3 billion of National Bank related goodwill carried in the group's balance sheet as an asset. That's because the goodwill is attached to the future cash flows of the National Bank rather than its logo.
He also said ANZ would be spending NZ$100 million, through a combination of capital expenditure and operating expenditure, on rebranding and reconfiguring branches and ATMs, suggesting this spending shows ANZ wants to grow rather than shrink its business in New Zealand. He said the roles of around 200 IT contractors would end and a few full time staff may lose their jobs but they'd be offered roles elsewhere within the group. Branch numbers will fall from about 300 to about 280.
"We now have one management structure and one customer approvals process. We'll very soon have one set of products and one technology system," Hisco said.
"I'm really excited about the future because very soon we'll have a new ANZ that has more resources and a singular focus and our growth this year in mortgages, business banking, deposits and credit cards has
already demonstrated what an organisation can do when it has a singular focus."
See ANZ's press release below:
ANZ National Bank today announced that after almost ten years of operating ANZ and The National Bank in New Zealand, the two brands would be brought together as ANZ.
New ANZ to remain in all communities now served by ANZ and National Bank.
$100 million to be spent on branches, with branch presence in New Zealand increasing from 75% of where New Zealanders live to 90% - 15 new communities.
ANZ to adopt The National Bank’s technology system and the majority of its products.
Customers will continue to be served by the same staff – all frontline staff will remain with the new ANZ.
All sponsorship and community involvement commitments will continue.
ANZ National Bank CEO David Hisco said The National Bank brand would progressively be phased out over about two years from around the end of October. The company’s legal name would become ANZ Bank New Zealand Ltd.
“ANZ bought The National Bank in 2003 and after almost ten years of reducing duplication, the next logical step is to combine them into one,” Mr Hisco said.
“In recent years we’ve made things simpler for customers by creating one management structure across both banks, one customer approvals process and, very soon, we’ll be moving to one set of products and The National Bank’s technology system.
“The black horse and green colour branding of The National Bank are licensed from British bank Lloyds TSB, and that licence expires in 2014. So it makes sense to change to ANZ, the brand used in 32 markets around the world.
“All our frontline staff will continue to be part of the new ANZ – there will be no frontline job losses as a result of the brand change. The National Bank’s sponsorships and community commitments will continue under the ANZ brand.
“Customers will still be able to see the same people they’ve always dealt with in the same communities we’re in now. For most National Bank customers, it will be business as usual – they will see the same people, just wearing a different uniform.
“At the moment we have about 300 branches nationwide and over the next two years as we combine some of our adjacent branches, we’ll end up with about 280 full-service branches, still the most by far of any bank.
“This will see us investing $100 million in the next two years to ensure we have a well positioned and attractive branch network for customers in current and new communities.
“Over the next two years, we'll increase our branch presence from 75% of where New Zealanders live to almost 90% - so 15 new communities will get branches,” he said.
For ANZ and National Bank branches located very close to each other, this means that in most cases those branches will either co-locate to the larger branch or relocate to an area nearby where there is customer demand.
Mr Hisco said: “The new ANZ will combine the best of both banks. ANZ’s strength and presence across Asia Pacific and The National Bank’s reputation for great customer service and internet banking will be the cornerstones of the new ANZ. We want to be the best bank in New Zealand.”
Cost savings at ANZ National have been made in recent years with the streamlining of head office management and processes, with more savings to come in the future from eliminating duplicated information technology costs.
As planned, there will be a group of staff, primarily technology contractors whose roles will naturally come to an end as the NZ Simplification project winds up in the coming months. Like all businesses in the current economic climate, ANZ will continue to look for efficiencies and savings where it makes sense.
“Our history in New Zealand dates back to 1840 and includes various mergers and acquisitions of financial institutions since that time. We have a huge commitment to New Zealand and that will continue,” Mr Hisco said.
He added that ANZ’s community commitments in New Zealand would continue through many initiatives including the Cancer Society’s Daffodil Day, Young Farmer of the Year contest, the ANZ Netball Championship and New Zealand Cricket sponsorships, the multi-million dollar ANZ Staff Foundation community donations programme and the financial literacy programme MoneyMinded.
ANZ’s annual contribution to New Zealand has included:
8,000 staff volunteering hours;
$12 million in sponsorships and charitable donations;
$450 million in taxes to the Government;
$600 million to local contractors and suppliers; and
$800 million in staff wages and salaries.
Additionally about 13,000 New Zealand shareholders and superannuation funds own about 33 million ANZ shares, worth more than $1 billion. ANZ’s parent company has increased its capital in New Zealand by more than $1.5 billion since 2009, taking total investment in the business to nearly $9 billion.
Incremental costs associated with the brand merger and related activities, which are estimated at around NZ$100 million, will be treated as non core and the majority will be recognised in the 2012 ANZ results. These costs will be offset by the gain on the sale of ANZ National Bank’s shares in Visa Inc announced by the ANZ Group last week.
(Updated with comments from David Hisco).