NAB slide 'unacceptable' says Stewart

SCOTSMAN John Stewart - drafted in to turn around Australia's largest bank - said today the overhaul of National Australia Bank will take several years as he unveiled an 'unacceptable' 15% fall in the group's full-year cash earnings.

The scandal-hit lender's quartet of British and Irish units - Northern Bank in Belfast, National Irish Bank in Dublin, and the Yorkshire and Clydesdale banks in Britain - experienced an even deeper slump as cash earnings plunged by a third.

Stewart is a widely respected figure in the British banking scene who cut his teeth at Woolwich building society and Barclays, and his efforts to rescue NAB's fortunesare being closely watched. Its pair of Irish banks has been on the block for some months with expressions of interest that are believed to have come from Lloyds TSB, HBOS and the Netherlands' Rabobank.

Stewart said today a decision on their fate will be made in a few months' time, confounding expectations that a sale could have been announced with the results.

'We expect to announce whether or not we think more value can be created by selling them,' Stewart said.

Analysts suggest a sale could raise at least A$2.5bn (£1bn), with the windfall expected to ploughed into the remaining British banks - if they are retained.

The new chief executive took the reins in February after his predecessor, Frank Cicutto, quit after a currency trading scandal that cost the Melbourne-based group A$360m.

At the group level in the year to September, cash earnings slumped 15% to A$3.46bn, and are forecast to go on falling in the first half of next year.

The decline means the NAB is the only one of Australia's socalled big four banks to report a drop in profitability this year even as the country's economy steams ahead. NAB's British and Irish operations also performed poorly as margins continued to come under pressure. Cash earnings at the four plummeted 33% to A$598m.

In a blunt indictment of NAB's shortcomings, Stewart said its structure was 'very complex and costly', it lacked a clear cultural framework, and compliance processes were 'poor'.

'The results reflect deeper problems that have been accumulating for several years,' Stewart said.

But the Scotsman insisted that a fix was possible.

'This is a turnaround story, and is not one that needs a grand strategy. What we really need is just plain old hard work,' Stewart said.