ASB launches ASB Institutional, drops CBA name

Photo / Natalie Slade

ASB has launched a new push in institutional banking, dropping the use of the Commonwealth Bank of Australia (CBA) name to operate under the ASB Institutional name as it looks to double market share within three to five years by winning business at the expense of rivals ANZ, BNZ and Westpac.

ASB is a subsidiary of CBA. The group has until now operated in the New Zealand institutional and corporate banking market under both the CBA and ASB names.

Kerry Francis, chief executive of ASB institutional banking and markets who will head up ASB Institutional, told interest.co.nz the bank had sent letters to institutional and corporate clients over the past 24 hours and had announced the change internally. Francis said the group had now decided to go with one brand and one team.

"That (one) brand is going to be ASB Institutional, which effectively we see as combining the ASB local experience and local heritage, but still leveraging off the global strength and expertise of CBA," said Francis.

"So there's still a strong linkage through to CBA, our parent, our shareholder. But more importantly in that corporate institutional space, the products and services they're able to offer into this market."

He said it was difficult to definitively estimate ASB/CBA's share of the institutional and corporate banking market, because it differed depending on customer segments and products meaning there was quite a lot of variance. That said, Francis estimated overall ASB/CBA had somewhere between 5 per cent and 10 per cent of the market.

"We think there's an opportunity over say, three to five years, to double our market share."

Asked whether ASB Institutional would launch any new products or services, Francis said this would be driven by what customers want.

"As a group we're very strong in commodity hedging, so we think there's some opportunities there," he said.

"We have been, for many years, very strong in asset finance, large asset finance, (so) we think there's some further opportunities in that space. More broadly, the more vanilla products around transactional banking, debt funding in a variety of forms, and financial markets products, particularly those that help people manage risk or help organisations manage risk."

ASB is likely to be hoping that a bigger presence in the institutional and corporate banking market will boost its margins. CBA chief executive Ralph Norris earlier this year said price competition for retail deposits was hitting ASB's margins.

And KPMG's June quarter Financial Institutions Performance Survey out last week, showed ASB's interest margins were significantly behind their big three rivals - ANZ, BNZ and Westpac - for the six months to June.

Even after a 15 basis points rise, KPMG said ASB's margins were 1.67 per cent, compared to ANZ's 2.25 per cent, Westpac's 2.24 per cent and BNZ's 2.12 per cent.

ASB Institutional will incorporate the CBA and ASB relationship teams, the CBA and ASB financial markets teams, ASB international trade services and global banking partnership staff, plus the transactional banking team. ASB said no jobs would be cut.

INTEREST.CO.NZ