Tower banks on Australia

New Zealand-based financial services group Tower is banking on the performance of its Australian wealth management operations in a bid to stave off a growing level of discontent among its New Zealand shareholders.

Tower managing director James Boonzaier was confronted this week at the group's annual general meeting in Wellington by shareholders voicing their concerns about the group's languishing performance.

Tower announced at the meeting that its net profit for the 12 months to September 2001, had dropped four per cent to $NZ77 million, a figure that was in fact boosted by a $NZ17 million business revaluation.

Boonzaier blamed the result on the group's poor investment returns, which had been affected by the "worst investment climate for 25 years".

But Boonzaier says Tower would look to overturn the result by narrowing its focus to wealth management, particularly in Australia.

He says Tower plans to leverage off its financial planning network and relationship with credit unions in Australia to improve the distribution of its wealth management products.

Earlier this year, Tower created Tower CU Alliance (TOCUA), a new business unit to channel its wealth management products through Australian credit unions, which Tower has had a relationship with since its purchased dealer group Bridges Financial Services in 2000.

Bridges, previously owned by the Credit Union Services Corporation (CUSCAL), has been singled out for praise by Boonzaier after it recorded a 20 per cent increase in profits in the year to September, 2001.

Tower also used the meeting with New Zealand shareholders to once again flag its intention to examine the possibility of moving its base permanently to Australia, where two thirds of its business now lies.

Chairman Colin Beyer says the group would re-consider the proposed move over the next three months.