NAB buys Aviva’s wealth management business, shares flat: Economy roundup

National Australia Bank has agreed to buy British insurance group Aviva’s Australian insurance and wealth management business for $825 million.

“The acquisition is expected to be earnings per share and return on equity accretive in the first full year following acquisition (excluding estimated integration costs),” NAB said in a statement to the ASX today.

NAB won the bidding process for Aviva’s assets, with AMP missing out. Chief executive Cameron Clyne said NAB is looking to expand its MLC division’s business and that the acquisition would help it in this regard.

“This acquisition will enhance our offering in key wealth management segments including insurance and investment platforms, adding scale, efficiency and new capabilities to our operations,” he said.

“Our MLC and NAB wealth management business is a key area of growth for us and we are well positioned to respond to changes currently taking place in the wealth management market as a result of the financial crisis and regulatory reviews.”

The Australian share market has opened higher today, with banking shares rising after NAB’s announcement. The benchmark S&P/ASX200 index was up 7.8 points or 0.2% to 3907.4 at 12.05pm AEST. The Australian dollar also rose to US80 cents.

NAB shares rose 1% to $22.31, while Commonwealth Bank shares also gained 0.5% to $38.70. Westpac gained 0.3% to $20.17, while ANZ rose 0.4% to $16.62.

Asciano chief executive Mark Rowsthorn has said the company’s $2.35 billion capital raising was the proposal most certain to keep the business running and help it improve itself.

“We had four or five serious proposals in the end to consider last Sunday night,” Rowsthorn said, told ABC TV’s Inside Business. “They involved broad-based recaps for the company, and also sales of parts of the business, ports and coal… the capital raising was one of the options that we had to consider.”

“When you looked at keeping the business together, you looked at the certainty of the transaction, the proposal we have chosen is the most certain.”

The company said it plans to use the funds to cut down its debts, which currently stand at about $4.9 billion.

Meanwhile, BHP Billiton has agreed to end a legal dispute with partner Asiaticus Management Corp, with Asiaticus secretary Lito Atienza saying that both companies have agreed to “start with a clean slate”.

“This is a major breakthrough after one year of talking sense to each company. It’s a big step,” Atienza said. The companies have been engaged in legal action since last year due to Asiaticus cancelling a joint venture agreement with BHP.

The International Monetary Fund will most likely revise its 2010 global growth forecast, due to signs the decline in global economic activity has stabilised, but still warns of hardship over the next year.

“While the latest data point to a slowing of the global contraction, there is still great uncertainty regarding the timing and pace of economic recovery,” IMF first deputy managing director John Lipsky said to the Turkish Industrialists’ and Businessmen’s Association.