NAB needs to convince shareholders that its purchase of ABN Amro's local businesses will create long-term value.
National Australia Bank (NAB) chief executive John Stewart may end up trying to do what Fortis' chief Jean-Paul Votron couldn't: assuring retail investors that buying parts of ABN Amro would create value.
NAB faces a challenge in convincing shareholders that the purchase of the Australian arm of the fund manager will create long-term value after the acquisition of the European entity resulted in disgruntled shareholders ousting one of the chiefs responsible for the purchase.
In Europe, Fortis chief Votron was forced to step down after shareholders held him responsible for the falling share price and cancelled dividends which followed the acquisition of ABN Amro in October 2007.
Votron teamed Belgium-based Fortis up with Royal Bank of Scotland (RBS) and Banco Santander for a $120 billion purchase of ABN Amro.
At the time of the acquisition, Votron told shareholders that the deal would add value and that he had 30 years' experience of acquiring companies and turning them around.
He was forced to resign on July 11 after the takeover left Fortis with a share price and market value that was over 50 per cent lower since last October.
The interim dividend was also cancelled and the bank had announced a $13 billion capital raising.
NAB's Stewart may have to sound more convincing to investors and analysts than Votron after NAB announced that it may acquire ABN AMRO's local businesses.
That may be difficult, according to Bell Potter director of research Peter Quinton, who said NAB had created "unease" amongst analysts after the news broke out.
"If NAB was successful in getting ABN AMRO's local units, from my perspective it would lack strategic logic," he said.
He added that NAB's long-term track record of integrating acquisitions had been "very poor".
NAB's shares slumped 3.57 per cent to $26.47 yesterday, making it the second-worst performer of the Big Four.
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