Implementation next step for bank

By Richard Braddell

WELLINGTON - After years of restructuring, trauma, and political intrigue, to move the Bank of New Zealand's headquarters to Auckland seemed a good way of shaking out some unfortunate baggage.

If that was the case, its managing director of 12 months, Mike Pratt, is not prepared to dwell on it. However, he says the decision to move executives to Auckland last October was reinvigorating for staff, but the main intent was to bring the bank closer to its key business and corporate markets.

Having forsaken the 24th floor in Wellington, Mr Pratt claims to have flattened the management structure, literally, with all the divisional chiefs working with him from the same floor in Queen St, a move he says has improved communication within the bank.

Of his first 12 months, Mr Pratt says it has been a time of fact-finding, strategising and now implementation.

The bank has just appointed a new general manager for private banking who will spearhead a renewed attack on the wealthy private individuals market segment.

This will run under a new division to be known as premium banking, which launches in May.

Aimed at the wealthy - defined as having a relationship with the bank involving assets or liabilities in excess of $500,000 - those people often live in Auckland and have connections with the business and corporate markets targeted in the move north.

In recent years, the business market has been the shining success for the BNZ.

In the last five years, the bank has consolidated its leadership of that market with the share of corporate customers viewing it as their primary bank growing from a quarter to 31 per cent, while 38 per cent have a secondary relationship.

BNZ is also second only to National Bank in the rural market, although its 25 per cent share is overshadowed by National's 40 per cent. But in spite of strong growth in recent years, Mr Pratt says the market has been surprisingly resilient through the economic downturn with no rise in loan defaults.

However, the bank has lost market share among retail customers, although Mr Pratt says it is holding its own in the sought-after mortgage market.

"That's the one area where we have dropped the ball in recent years," he says of the retail operation.

He says price is a major determinant in capturing new mortgage business. But so, too, is access to the bank through a number of channels.

BNZ expects to have Internet banking in place for its premium customers by the end of July, but has no plans to go the ASB route of developing a separate Internet bank with independent pricing.

While Mr Pratt sees a Net service as an essential channel for customer access, his expectation is that take-up will be limited.

As for Y2K issues, the bank has spent $31 million sorting out its own information systems. Mr Pratt says the banking system overall is well on its way to ensuring the banks will continue to function at the turn of the century.

However, the absence of "Good Samaritan" legislation to protect those who pass on in good faith information about their preparedness is tempering the assurances that he would like to make.

The Government expects to pass legislation in May.