Australian firm set to hang on to NIB for now

NATIONAL Irish Bank (NIB) may not be sold immediately by its Australian parent company.

National Australia Bank (NAB), owner of NIB and Northern Bank in Ireland, has appointed investment banker Lazard to review its options and no final decision will be taken until then. The report is due to be competed before November.

NAB has other more immediate pressures to worry about such as the collapse of its share price over the last 12 months. Analysts say the sell-off of NIB or its British regional bank is not going to resolve that immediate difficulty.

NAB’s share price tumbled following revelations of major currency losses through bad foreign exchange deals.

Many of the board have been axed and John Stewart was appointed chief executive last year to shore up the operation.

More than once Mr Stewart has said that selling off NIB or other northern hemisphere subsidiaries was not necessarily the best strategic option open to NAB.

Admitting that the banks were on the market would damage the sale prospects of the banks.

And NAB has never said any of its banks in either Ireland or Britain were for sale.

Last week Mr Stewart was still persisting with the line that the bank has unlocked potential. He added that he was looking to Lazard to suggest ways to “refresh” NAB’s subsidiaries.

Lazard is expected to report before November when the future strategic direction of the group and its British and Irish subsidiaries will become clearer.

Recently a report found that 19 of NIB’s former top officials, from a chief executive down, had facilitated tax evasion and committed other acts of serious misconduct against customers of the bank.

The six-year High Court investigation into NIB left the bank’s reputation in shreds and with a bill close to €60 million.

After the damming report by the inspectors was published it was assumed NIB would be sold. But the Australian parent has stood firm so far and whatever happens down the line there looks to be no immediate threat to NIB.

If the banks are sold, Halifax Bank of Scotland (HBOS), which has a growing presence in Ireland, was said to be the strong contender to buy the Irish subsidiaries.

Irish Life & Permanent, Royal Bank of Scotland and Bank of Ireland have also been mentioned in the list of likely suitors.

However since the possible sale of NIB was first mooted, several years back, the fortunes of NAB have changed significantly.

Its own future is in doubt at this point and sources suggest the situation is now totally up in the air.