NAB chairman Ken Henry backs Andrew Thorburn as CEO after royal commission battering

NAB chairman Ken Henry has laid to rest speculation that chief executive Andrew Thorburn could be shown the door.

NAB chairman Ken Henry with CEO Andrew Thorburn. Picture Supplied

National Australia Bank chairman Ken Henry has laid to rest any suggestion that chief executive Andrew Thorburn could be shown the door after NAB’s poor showing in the financial services royal commission.

Giving the keynote speech at an infrastructure conference this morning, Dr Henry said Mr Thorburn was a career banker who shared the board’s perspective on what was needed to win back the trust of customers — being serious about the bank’s social purpose, taking a longer term approach, and ensuring the customer was at the heart of NAB’s decision-making.

“(Mr Thorburn) understands that banks are not only about making money — they are about people,” he said.

“Of course, banks generate returns for shareholders. That is important, but that is not why banks exist.

“Generating returns for shareholders doesn’t tell you anything about their purpose, or the vision that unites their workers, or the values they share, or their behaviours.”

Like its rivals, NAB (NAB) has featured prominently in a number of hearings conducted by the royal commission.

However, speculation about Mr Thorburn’s was ignited by the departure of one of his lieutenants, consumer and wealth boss Andrew Hagger, who had a torrid time in the superannuation round of hearings.

NAB’s former chief customer officer Andrew Hagger leaves the royal commission hearings. Picture: AAP

NAB, according to senior counsel assisting Michael Hodge, was not full and frank on members’ likely losses from wrongly imposed plan service fees, or the expected amount of remediation.

Instead, in a bid to minimise reputational damage, the bank was silent when ASIC asked if the figures in its breach report were accurate.

Hodge took a dim view of Mr Hagger’s evidence that he “left the door open” for the regulator to ask the question.

He told commissioner Ken Hayne that the NAB executive “showed a disrespect for the role of the regulator (ASIC) and a disregard for the gravity of the events in question”.

A week later, when Mr Hagger said he would leave NAB in November, he accepted accountability for things that had occurred on his watch, including cases where the bank “did not act with the pace required”.

“I did seek to find and fix issues to benefit our customers,” he said in a note to staff.

Despite the sector’s battering from the royal commission, Dr Henry said Mr Thorburn shared the board’s “absolute determination” to win back the trust of NAB’s customers and communities.

He listed a number of the CEO’s achievements, including reform of the pay framework for frontline bankers, and helping customers for longer by holding the bank’s variable mortgage rate of 5.24 per cent instead of the hikes announced buy the rest of the sector.

Mr Thorburn, he said, had invested heavily in simplification of business lending contracts, accelerated the phasing out of grandfathered commissions in the wealth business, and removed penalty rates applying to late repayments in drought-affected areas.

The NAB chief and his senior leaders had also visited six communities in regional and rural Australia over the past six weeks, with a further seven planned.

“Through these investments, Andrew is trying to figure out how NAB must transform to ensure that it really does do the right thing for the customer, everywhere and every time,” Dr Henry said.

“Andrew’s journey in transforming NAB is still in an early phase, but it seems to me that, already, there are lessons for all of us.”

“As part of rebuilding customer and community trust, business should recognise the powerful role it can play in ensuring Australia has the right infrastructure, in the right places; infrastructure that is affordable, reliable and sustainable.”