Banks in secret merger talks in 2008
Move failed to win Government support
Global financial crisis final nail in coffin
NATIONAL Australia Bank and ANZ sought to bring down the four pillars policy through a bold merger in 2008 that preceded the depths of the global financial crisis.
Talks between the Melbourne-based institutions were conducted for several months in the first half of 2008, but efforts to win support from the Rudd government for the controversial move failed.
The Australian has confirmed with several senior sources on both sides of the aborted negotiations that the talks took place.
Under the plan, NAB chairman Michael Chaney would have assumed the role as head of the board at the merged entity.
ANZ chief Mike Smith would have kept that position, most notably because at that time NAB had yet to appoint a successor to former chief executive John Stewart.
According to one well-placed participant, there were "significant social synergies" in the deal given that then ANZ chairman Charlie Goode was due to step down and Mr Stewart's replacement as NAB boss had yet to be finalised.
The push intensified following Westpac Banking Corporation's shock announcement on May 13, 2008 that it would buy NSW regional rival St George Bank for close to $17 billion.
But furious closed door lobbying in Canberra over a period of months made it clear there was little political appetite to accept a rationalisation of the banking sector on such a grand scale.
The situation reached an inflection point at what was seen at the time as a surprise, if not curiously timed, statement by Wayne Swan on June 2 prior to heading to a meeting of Organisation for Economic Co-operation and Development finance ministers in Paris.
In that statement, the Treasurer emphatically restated Labor support for the four pillars policy and soon after gave the House of Representatives Economics Committee the task of "identifying any barriers that may impact on competition in the retail banking and non-banking sectors".
"The government considers that Australia is best served by a stable banking system that can continue to draw on the strength and risk management skills of four major banks, rather than a lesser number," Mr Swan said.
There was no public trigger for Mr Swan's declaration and many commentators read it as being a response to the Westpac-St George tie-up. It is now clear that the statement was fashioned as what one player described as "a direct shot across the bows of NAB and ANZ".
The parties persisted pushing the deal with the Prime Minister and Treasury, even after Mr Swan's statement, but it became more apparent that it was a futile exercise.
"Within weeks our efforts and hopes were dead and buried. Swan had made it very clear that he was entirely opposed to the deal. We packed up our bags and moved on," said one source close to the transaction.
Having deliberately held back in anointing a replacement for Mr Stewart as it toyed with an ANZ tie-up, the NAB board then moved to address its leadership uncertainty and announced Cameron Clyne as CEO within two months, on July 31.
Knowledge of the talks was kept tightly held at board level and the senior ranks within each institution. So too the corporate advisers mandated to execute a merger agreement.
On the NAB side were Gresham Partners and Goldman Sachs JBWere, while a combination of JPMorgan and Lazard had been appointed by ANZ to represent them in the discussions.
Even within those firms the knowledge was - and still is - restricted to fewer than a handful of executives, such was the sensitivity around the plans.
Spokesmen for NAB and ANZ last night declined to comment.
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