NAB separates out MLC Wealth amid increased remediation
In what represents a key move, National Australia Bank (NAB) has decided to separate MLC Wealth from its consumer banking division when it issues its first half results later this year.
The big banking group has announced the move to the Australian Securities Exchange (ASX) at the same time as announcing a significant reduction in first half earnings because of a net increase in customer-related remediation matters of $268 million before tax, changes to its software capitalisation policy which it said would reduce NAB’s capitalised software balance by $1,056 million and reduce earnings by $742 million after tax and impairment of the carrying value of NAB’s investment in MLC Life of $214 million.
NAB has been preparing its MLC Wealth business for sale for close to two years but, until now, the business has been reported within the consumer banking division.
Importantly, in explaining the increased provisioning for customer-related remediation, the bank said that 69% were for wealth-related matters, 23% for bank-related matters and 8% for Bank of New Zealand.
It said that of the first half cash earnings charges, $184 million after tax related to additional provision required for existing matters which included adviser services fee charged by NAB Financial Planning salaried advisers to reflect a higher assumed refund rate of 40% compared to 28% as at 30 September, last year.
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