Market research firm Roy Morgan said the surge in numbers will see NAB jump ahead of ANZ to claim the second-largest customer base in Australia behind Commonwealth Bank.
“Citibank in Australia has around 1 million customers covered by its consumer banking arm and its lucrative white label credit card customers. Citibank’s customers are disproportionately drawn from the valuable higher socio-economic quintiles with over 60 per cent of Citibank’s consumer banking customers in either the AB quintile (35.9 per cent) or C quintile (24.4 per cent),” Roy Morgan chief executive Michele Levine said.
“Citibank’s customers are also far more likely to be drawn from NSW or Queensland with 40.6 per cent from either Sydney or Brisbane compared to 28.5 per cent of NAB’s customers. In contrast the Melbourne headquartered NAB draws 22.6 per cent of its customers from the Melbourne market compared to 18.5 per cent of Citibank’s customers in the southern capital.”
Ms Levine noted that to retain those customers, NAB must ensure it meets the needs of the customers who originally chose Citibank.
“Past experience with analysing mergers and acquisitions shows that an exodus of customers occurs when the acquiring party fails to recognise the unique reasons customers choose their brand in the first place – and why they stayed with it,” she said.
“For NAB to extract a positive dividend from this acquisition, assuming it is approved by the relevant regulators, it will need to continue to satisfy the needs and desires of the 1 million odd Citibank customers it will inherit with the successful completion of the deal.”
Earlier this month, NAB said it had agreed to purchase Citigroup’s Australian consumer business via an asset and liability transfer, with the bank to pay cash for the net assets of the Citigroup consumer business plus a premium of $250 million.
The bank said the required equity for the transaction was approximately $1.2 billion and that it was expected to be accretive to earnings and return on equity from completion.
Neil Griffiths
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
