NAB starts global search for CEO as Andrew Thorburn exits

NAB will embark on a global search for a new CEO, but internal contenders are also expected to be among the candidates.

NAB chief Andrew Thorburn has resigned. Picture: Stuart McEvoy

National Australia Bank will embark on a global search for a new chief executive after Andrew Thorburn’s resignation, although chairman Ken Henry said internal contenders would feature in the board’s deliberations.

Dr Henry, who will retire once a new CEO is chosen, said NAB was a “globally important company”, and shareholders would expect an extensive search.

“Having said that, the board is very confident there are a number of high-quality executives on the executive leadership team who would make great chief executives,” he said.

“We expect to have a number of strong candidates from which to select the next CEO.”

The leading internal candidates include former NSW premier and chief customer officer of consumer banking Mike Baird, and the head of the business bank Anthony Healy, who previously ran the New Zealand business that has been the incubator for NAB’s past two CEOs.

Chief financial officer Gary Lennon can’t be ruled out, having run the bank while Mr Thorburn has taken annual leave, with the current head of Bank of New Zealand Angela Mentis considered an outside chance.

Among the external contenders would be former NAB chief ­financial officer Craig Drummond, who jumped ship in 2016 to become Medibank CEO.

In the meantime, non-executive director and former senior ANZ and Westpac executive Phil Chronican will serve as acting chief executive.

NAB and Dr Henry are expected to be pressured by some investors to break a long pattern of internal CEO appointments, choosing an external candidate to smash a culture that was heavily criticised by royal commissioner Kenneth Hayne in his final report, published on Monday.

The outgoing chairman is also sure to attract criticism for remaining at his post to oversee the CEO search, when that responsibility normally falls to a successor.

Dr Henry, however, defended his continuing involvement.

“It’s for the board to select the CEO and it’s my expectation that I will lead that process,” he said.

“Despite the fact I’m leaving the bank in the next little while, I don’t think it disqualifies me from making an assessment about the qualities of the person needed to run the bank.”

As for the qualities needed in the next CEO, the outgoing chairman said NAB was on the right path but was “nowhere near the top of the mountain”.

“The CEO that we bring in has to take NAB to the top of the mountain where nobody questions the values that motivate the people in the organisation,” Dr Henry said.

“When we get to the top of the mountain, I’m confident that we will have established ourselves as Australia’s best bank and one of the very best banks in the world, so we want someone who can deliver that.”

Dr Henry said his top priority was to find the bank’s next CEO, but it was also important to refresh the board. He said he was determined to improve the quality of the board rather than diminish it.

Mr Chronican declined to say if he would be a candidate for the chairman’s role once his time as interim CEO came to an end.

Asked what had been the most confronting part of Mr Hayne’s final report, Mr Thorburn said without hesitation that it was page 411.

In that half-page, the commissioner attacked NAB’s culture, said he was not as confident as he would like to be that the bank had learnt the lessons of the past, or that it was willing to accept responsibility for doing the right thing.

He also said it was telling that Mr Thorburn “treated all issues of fees-for-no-service as nothing more than carelessness combined with system deficiencies”, when the total amount to be repaid was more than $100 million.

“That’s what’s caused the (board) discussions this week,” Mr Thorburn said.

Dr Henry said the decision that both he and Mr Thorburn made to step down could not be attributed to a single incident or event.

Rather, it was the culmination of some deep discussions over the past one to two days about NAB’s position and the responsibility both men had to the company.

Mr Thorburn said the alleged fraud in his office, which is under investigation by the NSW police, was a separate issue.

The bank, he said, continued to co-operate with the police, and the board had decided that the matter was closed, apart from the continuing police investigation.

“The most important thing is that no one in the bank, including myself, is under investigation by the NSW police,” Mr Thorburn said.

On the CEO’s controversial decision to take long-service leave so close to the release of Mr Hayne’s report, Dr Henry said Mr Thorburn had been CEO of Bank of New Zealand for six years, and at NAB for four years.

“I wanted Andrew to have the opportunity to lead NAB for several more years,” Dr Henry said.

“I wasn’t anticipating something of that nature (the commission’s final report).”