Andrew Thorburn: ‘NAB can transform in a year’

Embattled NAB chhief Andrew Thorburn is planning to jolt the bank out of its cultural malaise before the end of the year.

NAB chief executive Andrew Thorburn. Picture: Stuart McEvoy

Embattled National Australia Bank chief executive Andrew Thorburn believes he has the support of the bank’s board and is planning to administer a dose of shock therapy to jolt the bank out of its cultural malaise before the end of the year.

After stinging personal criticism in the Hayne royal commission’s final report triggered open speculation about the tenure of Mr Thorburn and his chairman, Ken Henry, the NAB chief emerged from a scheduled board meeting yesterday to defend the bank against charges of a poor culture and failing to learn from its mistakes.

He said meaningful cultural change could be achieved in 10 months, in contrast to the drawn-out process lasting up to a decade flagged late last year by Dr Henry.

“I think we’ve made ground in the past few years but it’s my No 1 priority now and I really have to zero in on it,” Mr Thorburn told The Australian.

“It can’t take 10 years. I think cultural change can happen a lot faster than that, needs to happen a lot faster, and will happen faster.

“We should be able to make meaningful change in 10 months — maybe not complete the journey but make some serious progress.”

In his controversial appearance before the commission in late November, Dr Henry surprised observers by saying a true cultural transformation could take 10 years. “I hope not but I wouldn’t be surprised at all,” he said.

“That would not be unusual for organisations that seek to embed challenge in cultures.”

$24.97 NAB closed up 94¢ p

In his final report, published on Monday, commissioner Kenneth Hayne said NAB stood apart from the other three major banks in that it might not have learnt from past mistakes, and was unwilling to accept responsibility for deciding what was the right thing to do.

It was telling, he said, that Dr Henry “seemed unwilling” to accept any criticism of how the board had dealt with some issues.

Further, Mr Thorburn had treated NAB’s involvement in the industry-wide fees-for-no-service debacle as “nothing more than carelessness combined with deficiencies in the system”.

“Overall, my fear — that there may be a wide gap between the public face NAB seeks to show and what it does in practice — remains,” the commissioner said.

The scathing review prompted speculation about the future of both Mr Thorburn and Dr Henry.

CLSA analyst Brian Johnson, who said before the final report that NAB might have to rejig its management team, repeated his conjecture, saying the bank might poach its previous chief financial officer Craig Drummond from Medibank.

Brandan Sproules of Citi said the pointed criticism of Mr Thorburn and Dr Henry was a potential source of instability at the bank, while Shaw and Partners analyst Brett Le Mesurier punted that the CEO would exit this month, followed by the chairman’s retirement later in the year.

Bank shares rallied sharply yesterday on the back of Mr Hayne’s modest reform recommendations, which fell a long way short of the dire predictions made by many observers.

NAB, however, was the laggard, lifting 3.9 per cent compared to the strongest performer Westpac, up 7.3 per cent.

Before the market opened, NAB released a statement saying Mr Thorburn had cancelled his planned — and highly controversial — long-service leave in response to the crisis.

Dr Henry said he was disappointed in Mr Hayne’s finding that he appeared unwilling to accept criticism of how the board deals with some of the issues raised by the commission.

“I know that it is not so,” Dr Henry said.

“The board and I have reflected deeply on those and other issues and, as I have said previously, we have taken them very seriously.

“The board has led a deep examination of our culture, governance and accountability.

“We are the only bank to publicly release our assessment, which clearly outlines 26 areas we are focusing on to be a better bank.”

Asked why he believed Mr Hayne had reserved NAB for particular criticism when its misconduct was often part of an industry-wide problem, Mr Thorburn said there was a clear focus on the bank’s handling of fees for no service.

He said NAB acknowledged it didn’t devote sufficient resources to the issue and was too slow to fix it.

The ham-fisted response was evidence of a poor culture, and showed a gap that had to be closed between the actual culture and what it should be.

“We are progressively moving to close that gap,” Mr Thorburn said.

“I believe Ken Henry is the right chair to help us lead that, and that we have the right management team.”