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NAB raid casts shadow over AMP NZ's future

By Duncan Bridgeman

Friday 29th August 2003

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The future of AMP New Zealand was in doubt yesterday after a lightning raid by National Australia Bank (NAB) sparked the likelihood of a major shakeup in the financial services industry here.

NAB confirmed at noon yesterday it had acquired 34.3 million shares in AMP at $6 a share, giving Australia's largest bank 5.4% shareholding in the struggling financial services giant.

AMP became a takeover target when investors savaged its share price following massive losses in the UK.

The NAB acquisition price was well above recent lows of $4.85 and AMP shares soared to a high of $7.30 when the market opened here yesterday on speculation that NAB is planning a full takeover. At press time yesterday the shares had eased to $7.05.

Banking sources said the move could benefit NAB-owned Bank of New Zealand if a full takeover took place.

Although AMP sold its banking operations to HSBC last year, it still has thousands of policyholders who are a potential godsend to a bank seeking to expand in a flat retail market.

AMP is in the process of separating its healthy Australian and New Zealand operations from the British business.

The company says the demerger will close the book on the losses of its British life insurance operations, which have suffered alongside other British insurers from overexposure to shares in falling markets.

NAB chief executive Frank Cicutto said the raid on AMP was a strategic investment and the bank was waiting for detailed information on AMP's demerger.

"National has no interest in acquiring AMP while AMP owns its UK business," he said in a statement.

AMP chief executive Andrew Mohl said the demerger was progressing to plan and documentation should be finalised in the coming weeks.

Massey University senior banking lecturer David Tripe said NAB's move was puzzling, given its $A4.5 billion purchase of MLC Financial Services in 2000.

"Maybe they decided that MLC wasn't an effective-enough brand in terms of getting into the insurance business and they would be better off with a brand like AMP, which despite various things still does have a good cache in Australasian financial markets."

Mr Tripe said the AMP foray would not necessarily rule out an NAB bid for the National Bank of New Zealand, which is also courting potential buyers, although much depended on whether NAB was looking at a full takeover of AMP or instead trying to stymie other potential bidders.

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