Day 417: 'Desire for change'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 417.
Today in summary: NAB announces chief executive Andrew Thorburn and chair Ken Henry are leaving; heads have already rolled at AMP today, and Deutsche Bank analysts have questioned the Commonwealth Bank’s decision to revert to a basic banking model in the current climate where innovation will be key to survival.
-- Alex
@AlexESampson
Current banker panic level: 😉🤭🤮
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1. Following this afternoon’s trading halt, National Australia Bank chief executive Andrew Thorburn has resigned and chairman Ken Henry announced his retirement after they were targeted specifically by Commissioner Hayne for their poor behaviour during and response to the royal commission. Henry was due to appear on the ABC’s 730 program this evening. Thorburn will finish at NAB on February 28 and the board has asked current NAB director Philip Chronican to serve as acting CEO effective March 1. Henry will leave once a new permanent chief executive has been appointed.


Mr Thorburn said: “It has been an honour to be the CEO of NAB, and to have been part of NAB since 2005.
“I have had a number of conversations with the Chairman this week. I acknowledge that the bank has sustained damage as a result of its past practices and comments in the Royal Commission’s final report about them.
“As CEO, I understand accountability. I have always sought to act in the best interests of the bank and customers and I know that I have always acted with integrity. However, I recognise there is a desire for change. As a result, I spoke with the Board and offered to step down as CEO, and they have accepted my offer.”
Dr Henry said he recognised 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.”
2. Heads have already rolled at troubled financial services giant AMP, with wealth head Paul Sainsbury departing following a leadership reshuffle. Chief executive Francesco De Ferrari, who began in December, said reinventing wealth management was one of his priorities, as was "driving change and efficiency".
3. Choosing to revert to a basic banking model rather than invest in new opportunities may have been a waste of a "good crisis" for the Commonwealth Bank, according to Deutsche Bank analysts Matthew Wilson and Anthony Ho. This came after CBA delivered a lower cash net profit for the first half of 2019, missing expectations. Australian Financial Review’s Jonathan Shapiro reports that Deutsche questioned whether CBA's was “positioning for a more challenging environment where revenues were harder to come by, while global growth prospects became more uncertain”.
"CBA had the currency to be bolder, the management youth to be more contemporary and cutting edge, the time to invest, the capability to be more canny and a portfolio of option pay-offs," the analysts told clients on Thursday. "Instead it is now moving to a savings-and-loan model seeking cost reduction.”
Today’s burn prize: A “well-placed official source”
🔥🔥🔥
… almost certainly “bulls--t”.
AFR senior reporter John Kehoe’s source argues that reports of insider trading before the banking royal commission final report was released are not backed up by the evidence.
“A few facts suggest the latest claim is unfounded speculation being fanned by Labor to seize on public discontent about banks and politicians.”
The Commentariat
The Australian’s business correspondent Richard Gluyas argues there is no credit squeeze and urges against undue panic.
“As dire assessments are made that the flow of credit is turning glacial after the banks rediscovered responsible lending, courtesy of a certain royal commissioner, the line from the nation’s top home lender is that, if there’s a problem at all, it’s on the demand side.”
The Australian’s senior business commentator John Durie discusses CBA chief executive Matt Comyn’s efforts to position himself as the sector adapts to a post-Hayne world, including addressing the bank’s weighty risk and compliance spend, announced in yesterday’s mid-year results.
“In the last half Commonwealth Bank boss Matt Comyn spent $432 million, or 64% of total new investment, on regulation and compliance, which in an era of slow growth means earnings will be a cost-out affair.”
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