BT Financial Group NZ inked a healthy $35.4 million dividend for Westpac for the year ending March 31 even as the Australian bank continues its wealth management exit apace.
The BT NZ contribution, coming largely off the back of the bank-owned $9 billion plus KiwiSaver scheme, remains something of an outlier across the Westpac group that is poised to offload its remaining wealth management assets.
Last week Westpac Australia transferred its A$37.8 billion personal and corporate superannuation business to Mercer – booking a small loss on the “merger”: the almost profitless super business changed hands for no financial consideration. However, Mercer also bought the Westpac-owned A$43.7 billion Advance multi-manager business in a combo deal that will see the Australian bank rack up an after-tax profit of A$225 million.
After swallowing the Westpac funds the Mercer Super Trust will hit A$65 billion in funds under management and give Mercer a collective local scale of A$90 billion when its non-super assets are included.
Kylie Willment, Mercer Pacific chief investment officer, said: “When you put together the local scale this merger will bring alongside the global scale and capabilities, I’m not sure there’s anybody who can say they have an equivalent offering in this market. I’d say to anybody, come at us and try and beat us.”
Willment said Mercer remained open to further mergers.
Westpac is also about to sell its Australian investment platform business, Panorama, with Colonial First State – the wealth management business majority-owned by private equity firm KKR with the Commonwealth Bank of Australia holding 45 per cent – tipped as front-runner in a race expected to fetch north of A$1 billion.
Following the Mercer agreement, Westpac specialist business chief, Jason Yetton, said: “This is a further step in the simplification of Westpac and supports the Group’s focus on banking in Australia and New Zealand.”
While Westpac NZ continues to own an investment operation through the BT link, the bank here has dramatically simplified its wealth offering over the last year or so, most recently selling the life insurance business to Fidelity Life.
The bank booked a pre-tax gain of $126 million on the life insurance sale that grossed $417 million and included a 15-year distribution arrangement with Fidelity.
“Ongoing commission payments from Fidelity Insurance Limited to Westpac New Zealand will be received in accordance with the distribution agreement,” the just-released Westpac NZ half-year report says.
For the six months to the end of March the bank recorded net life insurance income of $26 million – up $3 million on the same period last year. However, wealth management income dived from $27 million over the half-year to March 31, 2021, to $18 million for the latest six-month period.
Westpac NZ sold its high net worth advisory business to Forsyth Barr late in 2020, redirecting over 30 staff (including 20 or so advisers) and about $2 billion to the national wealth management network.
From March 1 this year, the Westpac NZ investment and insurance division “only provides funds management services”, the report says.
with additional reporting by Lachlan Maddock is contributing editor to Investor Strategy News (Australia)