Inside Money

Business writer David Chaplin blogs on personal finance

Inside Money : Imagine there's no AXA

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Could the combined AXZ-AMP create the mythical 'fifth pillar' to rival the big Australian banks? Photo / Thinkstock
Could the combined AXZ-AMP create the mythical 'fifth pillar' to rival the big Australian banks? Photo / Thinkstock

This week's sign-off in the High Court of Victoria marked the final legal obstacle in AMP's long-held ambition to take over rival firm AXA.

It's been well over a year since AMP first dangled the bait, with the final outcome delayed for months while the National Australia Bank's, ultimately futile, exciting counter bid ran its course.

Now all the fun is over the synergising can begin. Sydney Morning Herald columnist Malcolm Maiden explains the corporate-think behind the deal and how AMP boss, Craig Dunn, plans to "extract $120 million in merger savings".

Inevitably, some of those savings will come from sacking people.

Head of AXA NZ, Ralph Stewart, has already announced he will leave when the two companies officially merge at the end of this month, handing over power to AMP Financial Services boss Jack Regan.

Expect cultural clashes to follow - especially, as Maiden reports, from the AXA financial advisory networks, in Australia and NZ, who may not fit with the AMP autocratic style.

Across the Tasman, the deal has been lauded as creating the mythical 'fifth pillar' to rival the four major banks - a claim Maiden says is a little overblown.

With AXA NZ, AMP will add about $5 billion of funds under management and assume second place behind the ASB-owned Sovereign in the life insurance market - so I guess that makes it a stronger pillar of sorts.

Last year the Commerce Commission okayed the AMP/AXA merger saying in its decision enough competition would remain, even in the KiwiSaver sector where AMP will now own two default providers.

As I wrote about in an earlier blog that may result in less direct NZ control of KiwiSaver funds with AMP shifting much of its investment decision-making powers over to Sydney.

However, it may be true, as the Commerce Commission concludes, that New Zealand's financial services scene won't be any worse off after AMP absorbs AXA.

You may call me a dreamer but it would be nice to think, too, that NZ consumers might benefit from better, cheaper, stronger financial services products from AMP after it synergises its AXA acquisition.

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