No plans to merge JBWere with BNZ

Photo / Richard Robinson

The New Zealand private wealth management arm of Goldman Sachs JBWere won't be merging with the Bank of New Zealand despite a deal by BNZ parent National Australia Bank to buy a major stake in the Australasian business.

NAB yesterday said it had paid A$99 million ($123.6 million) to acquire 80.1 per cent of Goldman Sachs JBWere's private wealth management business in Australia and New Zealand.

The private wealth company will remain 19.9 per cent owned by Goldman Sachs JBWere but will be rebranded JBWere - returning to the name it was known for before Goldman bought into it.

NAB group chief executive officer Cameron Clyne said the acquisition fitted with the bank's strategy to build on its private wealth business. The company would sit under its Australian wealth business which already includes several different brands.

But the bank has yet to spell what its new relationship will mean for the New Zealand business.

Speculation has been rife about the fate of the New Zealand Goldman Sachs JBWere business, with talk of a management buyout and the possible defection of the wealth management arm to rival investment bank Macquarie.

Yesterday New Zealand Goldman Sachs JBWere wealth management chief John Cobb said the joint venture was a result of a strategic review of the business.

"It's about trying to maximise and make the most of the opportunities over the next three to five years. We are not changing anything materially, we are looking for growth opportunities," he said.

The deal would enable JBWere clients to retain access to existing products and services while also tapping into additional services provided by NAB including foreign exchange, derivatives trading and loans.

The agreement includes a clause that allows Goldman Sachs JBWere to distribute certain products to JBWere on an exclusive or preferred basis.

Cobb said the deal would not mean a drop in staff numbers.

"It's quite the opposite - we are positioning this business to grow and that will lead to adding more staff."

But he said JBWere would not become part of the Bank of New Zealand, which also has a private bank division that advises the wealthy.

"We will be a stand-alone entity."

A BNZ spokesperson said it would spend the next few weeks working through what it meant for the bank locally and could not comment further.

One industry insider said it was difficult to integrate a business that was not fully owned but questioned the sense of running two separate operations given the added costs.

The NAB yesterday said it did not expect any material contribution from the alliance in the first year.

But Cobb said the joint venture put the business in a strong position as both shareholders were committed to investing in it.

Analysts welcomed the buy.

Southern Cross Equities analyst TS Lim told the Australian newspaper JBWere's private wealth management business was a good fit for NAB.

"Overall, this is a very good strategic move and it is consistent with the CEO's move to de-risk the bank, and focus on domestic wealth opportunities. Because it is a wealth business, it is very capital-efficient, and I believe it will be return on equity accretive in the very short term," Lim said.

"JBWere is a premium brand in the Australian market," he said.

JBWere provides advice on more than A$38 billion worth of money belonging to about 22,000 wealthy investors - including $4 billion worth in New Zealand - across Australasia.

The acquisition is expected to be completed by the end of this year.