Clock starts ticking for culture change

Long-suffering NAB shareholders will be feeling a sense of deja vu after another dramatic change at the helm.

Long-suffering National Australia Bank shareholders will be feeling a sense of deja vu after another dramatic change at the helm.

The bank has lurched from issue to issue in the past two decades and the fallout from commissioner Kenneth Hayne’s rebuke on Monday was the final nail in the coffin for chief executive Andrew Thorburn and chairman Ken Henry.

Who can forget Henry’s comment in 2017? “I’ll have to throw Andrew Thorburn under a bus one day.”

It seems both have fallen on their swords this week.

It was a dangerous combination of factors that collided to bring about this outcome. They include explosive revelations at the Hayne royal commission, a fraud investigation that embroiled Thorburn’s former chief of staff and a massive 88.4 per cent vote against its remuneration report.

The CEO succession now goes into overdrive and NAB’s go-to-executive-search firm in the past has been Russell Reynolds.

Succession planning is a key role of the board, particularly ensuring the transition isn’t disruptive and as seamless as possible. This won’t be the case this time around.

And unfortunately, NAB’s potted history of the past 20 years is littered with mistakes, scandals, the unwinding of an acquisition-led strategy and transformation programs that didn’t quite get traction.

To be fair, Thorburn had enacted a number of quick decisions when he took over the CEO reins in 2014, including spinning off the troubled UK operations, getting in early on the sale of a controlling stake in its life insurance business and overseeing improvements in the business bank that are gaining traction.

Thorburn was also in the process of spinning off or selling MLC, cutting about 4000 jobs and simplifying processes and systems.

His transformation program, which members of the board including now acting CEO Phil Chronican were heavily involved in, was targeting outperformance in 2020.

That makes some sense as Chronican wants to stick to the plan.

“I am confident in our existing strategy to transform the bank to be better for customers and we will work with everyone at NAB to earn the trust and respect of the community,” he says.

“Our strategy and the self-assessment we completed into our culture, governance and accountability set out clearly the steps we need to take to change and we are committed to them.”

Whether that will be enough to appease investors and the broader community will be the key test in the months ahead. NAB’s track record doesn’t bode well, but a fresh start is a good first step.

Yesterday’s events bring back memories of NAB’s foreign exchange trading scandal that led to the demise of CEO Frank Cicutto in 2004 and a boardroom spat that ultimately led to the exits of Catherine Walter and five fellow NAB directors.

“There’s been disaster after disaster at NAB,” is how one senior industry executive characterised the bank’s string of missteps.

That makes the push for an external CEO appointment at NAB — with the right credentials — even more important.

The clock starts ticking now for the reset of NAB’s culture.