It's lonely at top for WestpacTrust boss

By Richard Braddell

WELLINGTON - For a branch of its Australian parent, WestpacTrust has had considerably more autonomy than many of its locally incorporated peers.

In contrast to the BNZ and ANZ, both of which are legal standalones from their Australian parents, there has been little drive towards integrating or aligning WestpacTrust's products, marketing and back office with the Australian operation.

WestpacTrust's remarkable degree of local autonomy owes much to history, and the fact that, in recent times, it has tended to outperform its parent.

Not that Westpac in New Zealand has always been a raging success. Its present chief executive, Harry Price, was appointed to the job in 1992 with a brief to implement change and turn the bank around after a less than stunning performance in years gone by.

A New Zealander, and the first appointed to the top job without first undergoing a period of indoctrination in group ways at the head office in Sydney, Mr Price says his job is a lonely one, since he has to balance the competing demands of the shareholders, customers and staff.

Mr Price took over shortly before the appointment as group managing director in Sydney of American Bob Joss, who was charged with cleaning up the group's bad loan mess.

"Bob said to me: 'I've got so much to fix in Australia that you go on and get on with it'," Mr Price says.

Mr Price says integration will take place. But it won't be the one-way trip typical of other banks where things inevitably get run from Australia. The reverse will be true too.

But he says autonomy is built on success. And while by 1995 the change programme implemented within Westpac New Zealand had boosted efficiency and customer satisfaction, the bank was still in a cleft stick as to its long-term strategic direction.

With 14 per cent market share, the bank was too small to be a success in the wider retail market.

Either it focused on its core institutional and corporate business, and the Government business won from the BNZ a few years earlier and confined retail activities to narrowly defined customer segments. Or it might take on the National Bank in the rural market.

But if it was ever to be a credible force in the New Zealand market, it needed market share of at least 20 percent, something it could only attain through acquisition.

Trust Bank had always been a possibility and when Westpac heard that negotiations were going on with National, it launched its own $1.3 billion bid, stealing Trust Bank from under National's nose.

The integration of Trust Bank has been no easy matter.

Probably the simplest task in the merger was to decide on the new name: WestpacTrust.

That done, Westpac had to put together two banks that were culturally completely different. Trust Bank was strongly retail-focused, Westpac had a business and institutional core.

And with Trust Bank in reality being nine different regional banks running nine products sets, systems and managements, Westpac was faced with the task of integrating not one, but nine different banks.

The result would be a bank that was different from its constituent parts.

While global corporate business would continue under the Westpac brand, WestpacTrust would have a retail focus that had never existed in its parent.

Mr Price regards the merger as a success, having exceeded its cost savings targets - nearly $300 million annually - and with customer attrition during the merger well below expected levels.

Nevertheless, he is candid that with the merger completed, the bank still has a task of reselling itself to its customers and its staff, and that is the major factor underlying the issue of $800 million in New Zealand class shares in the global Westpac group.

Ironically, WestpacTrust has the toughest job in areas where Trust Bank was strongest. Aucklanders, who lost their connection with Trust Bank when ASB went its own way, have proved a relatively easy, if vitally important, market for WestpacTrust. But strongholds such as Canterbury take some convincing.

In the end, the success of the Trust Bank merger might best measured against observations at Apec made by the ANZ Group's managing director, John McFarlane.

Mr McFarlane said that countries where ANZ had got into trouble were those where there was low domestic penetration as against the institutional and corporate activity.

If that was ever a problem, it clearly is not so now for WestpacTrust. Beyond doubt, the leading position in the home finance market gained through Trust Bank has given WestpacTrust a wealth of competitive knowledge about the New Zealand market.