Seven years after selling its U.S. banking arm to one Dutch company, National Australia Bank Ltd. is returning with what looks like a page from another Dutch lender's playbook.
The $495.9 billion-asset NAB announced Thursday that it plans to buy the $3.47 billion-asset Great Western BanCorp. Inc. of Omaha for $798 million in cash.
The seller's Great Western Bank, of Watertown, S.D., has more than 100 branches in six states, principally in the Midwest agricultural region.
"Our agreement today is the springboard" for NAB "and Great Western Bank to launch a proven and successful agribusiness relationship banking model into the western U.S.," Ciaran McMullan, the chief executive of the Melbourne company's American region, said in a press release. "We have significant experience in serving our clients in a large agricultural and commodities-based economy, which is very similar in nature to the Midwest of the United States."
In pursuing the deal, the Melbourne company is emulating the strategy of Rabobank, who has bought three banking companies in semirural areas of California in its quest to become a household name in American agricultural lending.
The Dutch company bought the $1.3 billion-asset VIB Corp. of El Centro in 2002 for about $213 million and the $1.3 billion-asset Central Coast Bancorp of Salinas in 2005 for $371 million. Last year the California unit Rabobank NA bought the $2.4 billion-asset Mid-State Bancshares of Arroyo Grande for $851 million. At the time Cor Broekhuyse, the chairman of Rabobank NA and the parent's regional head for the Americas, said it was pursuing additional acquisitions in an effort to nearly triple its U.S. assets, to $15 billion, in three to five years.
Curtis Everson, the president of the South Dakota Bankers Association, said that as part of the overall "growth in economic development around the globe," it makes sense that foreign banking companies would want to expand their U.S. agricultural operations
"It isn't just gasoline that people want — it's also agricultural products that American producers grow and grow well, such as beef and wheat and other grains," Mr. Everson said.
Moreover, "there continues to be a consolidation in agriculture production and ag business" in the United States, he said. "As the size of farms and businesses continue to increase, so do their capital needs — and so it's logical that the banking industry responds to those changes" with larger companies focusing more attention on the sector.
Brian R. Sterling, co-head of investment banking at Sandler O'Neill & Partners LP, said that other economic issues are also at play in the trend of foreign companies looking to do business here.
"We've seen continued activity by non-U.S. banks in the U.S. bank M&A market, given the weakness of the dollar, and given the relative fragmentation of our banking market compared to the markets in the rest of the developed world," Mr. Sterling said. "U.S. banks are very attractive."
This is not NAB's first bid to enter the United States. In 1995 it bought the $11.6 billion-asset Michigan National Corp. in Farmington Hills for $1.56 billion. But in 2000, NAB sold that operation to ABN Amro Holding NV for $2.75 billion and said it would redeploy assets from the sale to other businesses, including the development of its U.K. operations and a more rapid buildup of its global wealth management business.
Jeff Erickson would remain the CEO of Great Western Bank, reporting to Mr. McMullan.
"This agreement is the next logical step in our bank's future growth and development," Mr. Erickson said in the press release. "Our stated goal is to become one of the leading financial institutions in the western United States, and the capital strength and product portfolio" that NAB would provide "will help us to achieve our goal in a much more aggressive manner and time frame."
Since 1971, Great Western BanCorp has been owned by the Hamann family of Omaha.
"It's been our dream since the beginning to make Great Western one of the leading banks in the region," Deryl Hamann, its chairman, said in the press release. "When this opportunity presented itself, I knew it was the boost the bank needed to achieve our original vision."
He and Dan Hamann, currently the company's president, would remain advisers to the bank.
NAB said that the acquisition would be about 0.5% dilutive to earnings per share in the first year, with no impact on dividend per share. The company anticipates the deal to be neutral to earnings per share by the third year.
