The banking and finance royal commission has scored another couple of high profile scalps at the National Australia bank to go with casualties at the AMP, Freedom Insurance and IOOF.
The National Australia Bank announced late yesterday afternoon that CEO Andrew Thorburn and Chairman Dr Ken Henry were leaving the bank.
Last year the AMP lost the CEO, chair and several directors and senior managers, the NAB lost a senior manager and Freedom Insurance lost directors and senior managers and its shares remain suspended.
ASIC has moved to force five directors or senior executives from IOOF as well as a result of disclosures at the royal commission. The Commonwealth was forced to make radical changes at the top after the Austrac money laundering scandal and disclosure at the royal commission. These included the then CEO, plus other senior managers and board members.
Now the two top slots at the NAB have gone.
The NAB Board said it would initiate a global search process for the CEO role while actively considering a range of quality internal candidates.
Former NSW Premier, Mike Baird is favoured to be the new CEO, though the new chair is unclear but could be former ANZ executive Phil Cronican who is a board member of NAB and will be acting CEO from March 1.
Mr. Thorburn leaves on February 28. Dr. Henry says he will leave once a new CEO has been found.
The first hint of an announcement came yesterday with a pause in trading in NAB shares as rumours of a big announcement started circulating – and that was quickly followed by a suspension request from the bank.
“NAB advises that the trading halt is requested pending a further announcement by NAB regarding leadership changes,” the bank said in an announcement to the ASX.
The shares had risen $1.25% to $24.93 when the suspension was applied.
Commissioner Ken Hayne’s final report on Monday singled both men out for special attention as he expressed serious concerns about the pair’s leadership.
“Having heard from both the CEO, Mr. Thorburn, and the chair, Dr. Henry, I am not as confident as I would wish to be that the lessons of the past have been learned,” Commissioner Hayne said in his final report, released late Monday.
“More particularly, I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do, and then having its staff act accordingly,” he said.
Since then speculation has risen that both would go – on Monday evening the bank released a statement in which the two men indicated they were staying. But that convinced no one and some major shareholders are believed to have told the board that there had to be change.
Adding to pressures on the board was the record 88% ’no’ vote from shareholders against the NAB’s 2017-18 remuneration report presented to the AGM last December.
With question marks over the chair and the CEO, NAB was on no position to resist another ’no’ vote at this year’s AGM even though it is 10 months away. Another huge ’no’ vote would have spilled the board and possibly seen humiliation with one or more directors not re-elected.
In yesterday evening’s statement, the NAB played up the roles both men played at the bank.
“During his time as CEO, Mr. Thorburn repositioned NAB to focus on its core business in Australia and New Zealand. This included the divestment of Clydesdale Bank, Great Western Bank, and MLC Life.
“In 2017 he launched a significant transformation of NAB to make the bank simpler, faster and more focussed on customers. This program continues and the NAB Board is committed to the targets outlined in November 2017,” the NAB statement said.
The quoted statement Dr. Henry as saying he and the Board had recognised that change was necessary. “The timing of my departure will minimise disruption for customers, employees, and shareholders.”
“This is naturally a difficult decision but I believe the Board should have the opportunity to appoint a new Chair for the next period as NAB seeks to reset its culture and ensure all decisions are made on behalf of customers.
“I am enormously proud of what the bank has achieved and equally disappointed about what the Royal Commission has brought to light in areas where we have not met customer expectations. Andrew and I are deeply sorry for this. My decision is not made in reaction to any specific event, but more broadly looking at the bank’s needs in coming months and years,“ the NAB statement quoted Dr. Henry.
In addition to the new CEO and chair, the NAB said it would look for new independent directors “ to increase diversity of thinking and experience for the challenges ahead, and establish a Board committee for customer outcomes.”
