Banking royal commission: time for a big banker to earn his big bucks

In the royal commission, it is above all the chief executives and the chairmen of our big four banks and the AMP who have been called to account.

And so it is all the more remarkable that Kenneth Hayne singled out just one bank chair, Ken Henry, and his chief executive, Andrew Thorburn. One can only imagine the shock at NAB’s headquarters in Melbourne’s Bourke Street as the news broke after the close of the market on Monday.

“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,” Hayne opined.

Overnight, top bank analyst Brian Johnson had written in his note to clients: “Management change at NAB is likely as both CEO Andrew Thorburn and chairman Ken Henry were specifically signalled out as not being willing to ‘accept the necessary responsibility for deciding, for itself, what is the right thing to do’.”

By yesterday morning, Thorburn was back at work, had cancelled the rest of his extended leave and was fronting the media. A very good report, was his overall assessment, but he would not accept Hayne’s naming and shaming.

“When you read the reference to myself and Ken Henry, I found that upsetting and hard to read. I did feel it was harsh,” he said.

“I respect the commissioner’s view. I’m very honoured to be a leader, especially at NAB, and I feel that the way he’s describing me is the polar opposite of what I want to be and what I am and the sort of change I’m leading inside the company.”

The NAB chairman also took issue with Hayne’s treatment. Henry states he was disappointed the commissioner thought he seemed unwilling to accept criticism of how the board dealt with the issues raised by the commission.

This is a big stand-off on the top floor: the former head of Treasury, the chair of the bank who presumably sets the culture from the top, the man who was called “out of touch” when he was on the stand at the commission.

I asked Thorburn yesterday if NAB could really change its culture if the leaders were not contrite from the get-go.

“We have been contrite, I think this is where we need to be clear,” Thorburn said.

“We’ve said we have made mistakes, we are sorry, we want to fix them, that we’re making new decisions about interest rates and default interest rates and offset accounts and branch closures. I think they’re the decisions that show that we’re listening and acting differently.”

Henry did not cover himself in glory in the theatre of the royal commission. Even he admitted as much with a playful aside to his wife. But in banking circles there is surprise at Henry’s stringing up by Hayne.

We know Hayne reserved particular criticism for the fee-for-no-service scandal and NAB was first to be brought to court by ASIC, which estimates potential penalties of more than $1 billion. It is hard to think about Hayne this week in terms other than holier than thou, yet could it be that Henry also got under Hayne’s skin?

Both these Kens, who even share the same initials, are after all, self-aware towering intellects and, just perhaps, the commissioner took a little umbrage at Henry’s manner.

Thorburn does not feel let down by his chair.

“No. Ken Henry — we can’t get our Kens mixed up — Ken Henry has said ‘I did acknowledge that the board did not take fast enough action and I regret that’. That’s my words and not his. But the Ken Henry I know and I work with every day has integrity, has values, puts customers first, lives in a small town in Australia, has always thought long term and done what’s right for Australia. That’s the Ken Henry I know, not the Ken Henry I read about in the Ken Hayne report.”

Thorburn is bracing for news of what any referral to regulators that Hayne has made could bring. He has not had any legal advice on any possible criminal charges against him or any other executives.

But it is the judgment of Thorburn — all-round good bloke in market circles — that is now in question over his decision to take extended leave right when the proverbial was hitting the fan: the November action by ASIC over its fee-for-no-service scandal, the December strike to the remuneration report, and the Hayne report this week, and a major restructuring under way.

Here, Thorburn is unrepentant about the need for the break, which all corporate leaders require.

“It’s demanding, you need energy, you need a break, you have a life outside the company. I’ve got a marriage, I’ve got children, I’ve got elderly parents. I raised this a year ago with our chairman and the board. I said when the royal commission report comes out I’ll come back, and, obviously, I’ve cancelled my leave as effective last night. I’m back.

“But I think it’s a bit unfair to think that a CEO can’t take leave that is due for their own mental and physical health when they’ve laid out a plan and they’ve got an army of very good leaders who are carrying out that strategy.”

Thorburn does not mention the weight of a criminal case involving his former executive assistant, which must be a throbbing problem.

Will Thorburn be around to deliver his half-year results in May? Probably.

His full-year results in November? Hmm.

Or will he be there to drive the bank through the proverbial to make way for a cleaner skin, perhaps a “man of the people” such as Mike Baird to take the reins after that?

It is at times like this that big bankers earn their big bucks.

Ticky Fullerton presents Ticky at 5pm on Your Money