ANZ chief to step down, replacement named

ANZ has tapped an international banker to replace its long-serving chief executive Shayne Elliott in a “clean slate” appointment and tasked him with integrating Suncorp into the wider group and driving the bank’s focus on fixing its culture amid a string of corporate governance failures.

Former HSBC executive Nuno Matos will begin in the new role on July 3 and retain Elliott’s strategy of investing in its new digital banking platforms, growing its institutional division and mending its non-financial risks, according to ANZ chair Paul O’Sullivan.

ANZ chief executive Shayne Elliott will be replaced by Nuno Matos (right). Credit: Arsineh Houspian, Bloomberg

The Portuguese-born Matos, 57, has more than 30 years of experience in retail, commercial, and wholesale banking in Latin America, Europe, and Asia. He was most recently the chief executive of HSBC’s wealth and personal banking division based in Hong Kong, before he left in August after missing out on the top job there.

Elliott’s exit after nine years as chief executive means three of the country’s big four banks would have had changes at the top this year, following Westpac and NAB, which both announced internal appointments – typically preferred by investors and analysts.

ANZ’s head of institutional, Mark Whelan, 64, had been widely tipped to replace Elliott until a suite of scandals in his division rocked the bank this year, and there were also concerns about his age.

Other internal candidates included the head of the New Zealand division, Antonia Watson, who was ruled out of the process after indicating she would be unable to move to Melbourne for the role, as well as retail group executive Maile Carnegie and chief financial officer Farhan Faruqui.

“Nuno has got a set of characteristics which are particularly appealing to ANZ,” O’Sullivan told reporters on Monday morning.

“He has experience in both wholesale and retail banking. He has been a successful CEO of large-scale banks in a number of different markets. He has an excellent track record in delivering change and transformation, and that includes bank integrations, which is an important area for ANZ, and he’s had an international career with two of the world’s leading banks in Santander and HSBC with a proven track record of being able to adapt well to new markets.”

O’Sullivan denied internal candidates had been overlooked because of the corporate governance issues engulfing the bank, instead likening Matos to a “star football player for a top team in the AFL” who was available on the transfer market.

He said ANZ decided to “move quickly and effectively” after Matos quit HSBC in August. However, he stressed Matos’ appointment did not signal a departure from Elliott’s strategy.

The new chief was unable to speak to the media due to his contract terms with HSBC, but in an interview with ANZ’s communications team, he said ANZ had the correct strategy and was headed in the right direction.

“We have to make sure that we double down in our strengths – the two scale markets [Australia and New Zealand] and our leading institutional franchise,” Matos said. “It will be a positive agenda. It will be to build on top of it, to evolve, to move forwards, to really be focused on our customers, on a strategy which is quite clear.”

Matos will be responsible for resetting ANZ’s culture, which is under heightened scrutiny by financial and corporate regulators. The Australian Securities and Investments Commission is investigating allegations traders manipulated the bond rate, forcing up the federal government’s cost during a $14 billion debt sale last year.

ASIC is set to finalise the probe by April and is likely to commence proceedings against ANZ, indicating investigators have uncovered evidence supporting the allegations, a source not authorised to speak publicly said. External lawyers are now assessing ASIC’s brief of evidence, and the regulator is likely honing in on the most egregious examples for its case.

ANZ has engaged Herbert Smith Freehills and the bank has maintained that its probe has found no evidence of wrongdoing.

Separately, the Australian Prudential Regulation Authority in August hit the bank with a $250 million capital add-on charge after ANZ admitted its markets unit inflated its bond trading figures to the federal government – portraying itself as more experienced than it was – and a workplace complaints investigation found traders in the Sydney dealing room were inebriated during working hours.

Nuno Matos has held a number of high-profile roles at HSBC.Credit: Bloomberg

O’Sullivan said ANZ’s board would reflect on the findings of an internal investigation into workplace culture led by Oliver Wyman. However, he declined to comment further on the internal investigation led by Herbert Smith Freehills into the bonds trading saga.

The ANZ board this year slashed Elliott’s short-term bonus by almost half to $1.3 million, while Whelan’s was cut by 60 per cent to $565,000, and chief risk officer Kevin Corbally lost 40 per cent to take home $624,000 amid the scandals.

Matos’ remuneration will be set at $2.5 million per annum, with short- and long-term bonuses. Elliott will remain with the bank until September 30, 2025, to provide handover support to his replacement.

Elliott was appointed chief executive in 2016 after four years as chief financial officer and head of institutional. He has simplified the bank’s Asia strategy, invested in new technology, such as ANZ Plus, and this year acquired Suncorp’s banking division.

The market did not receive Matos’ appointment warmly, with ANZ’s shares falling 3.6 per cent to $30.03.

One analyst, speaking confidentially, said it was disappointing that Whelan had missed out on the top job and that he would have made an ideal chief executive. They were also worried Matos would focus on re-growing its international arm after Elliott reversed his predecessor Mike Smith’s strategy of expanding the Asia business.

MST analyst Brian Johnson said O’Sullivan’s comment the strategy would remain the same was a “missed opportunity” by the bank to move forward.

“You need to think, ‘Is their strategy absolutely right?’ You can see them writing home loans below the cost of capital, and then if you have a look at Suncorp, that’s not without risk, and then you have this ANZ Plus [digital banking] platform, which is also not without risk,” Johnson said.

“We have a bond manipulation case that will probably be resolved one way or another in the new year, but the chair says, ‘really, nothing is changing’, and to some extent, that’s disappointing.”

In a note, JP Morgan analysts Andrew Triggs and Kelsey Bentley said the timing was right for chief executive renewal.

”We had been increasingly of the view that an external hire would be likely given there appeared to be no obvious internal candidate,” Triggs and Bentley said. “ANZ has been the weakest share price performer of the major banks this year; however, our near-term revenue forecasts are below consensus given our more pessimistic assumption on [net interest margin] pressures.”

Meanwhile, UBS’ John Storey told clients Matos’ appointment brought a “fresh perspective and a clean slate” to make the necessary changes.

“The most pressing challenges for Mr Matos, in our view, are likely to centre around (amongst others): 1) getting familiar with the Australian and New Zealand banking landscape, 2) establishing his executive team, 3) taking a decision on the current organisational and operating structure and 4) tackling the strategic priorities of ANZ Plus and Suncorp bank integration.”

O’Sullivan paid tribute to Elliott, pointing out that he took over the top job at ANZ when the bank’s Asia expansion strategy was not working, the institutional business was not returning the cost of capital, and a number of businesses were not core to the bank.

“Fast forward to 2024, and you’ve got a bank that has put in a very strong financial performance,” O’Sullivan said. “Our institutional bank has had its best every year and is now returning a return on equity above the cost of capital; in New Zealand, the merger has been a very strong success … and very importantly, we released a lot of capital.”

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