Westpac’s internal succession battle takes shape

Fresh-faced Westpac executive Jason Yetton has been given a second chance to prove he has a shot at becoming chief executive of a big four bank and this time he is not going to let it pass.

Yetton was the big winner in Westpac’s executive shake-up that has narrowed the field in an internal succession battle when current boss Peter King decides to step down in coming years.

When asked about planning for his own retirement earlier Thursday, Mr King told The Australian: “I’m here, and I’ve got plenty to do”.

“It’s the conclusion of portfolio simplification and me thinking about the future and how I want the organisation structured. I wanted to go back to a consumer business construct to see greater focus,” he said of the restructure.

Yetton, who rejoined Westpac from Commonwealth Bank three years ago, has been named the new head of a stand-alone consumer banking business which takes in all the retail banking brands from Westpac, St George and Bank of Melbourne.

He replaces current retail boss Chris de Bruin, who has opted to leave after his mega-division consumer and business banking was split in half.

Westpac executive Jason Yetton was a big winner in a top level shake-up. Picture: Hollie Adams

In fact the new-look structure is back to the future for Westpac with the creation of the business banking division again, although this will also oversee the remaining wealth operations too.

This is to be headed up by firm internal succession contender Anthony Miller, the career investment banker who has been running Westpac’s institutional banking business since October 2020.

Among the big four – Westpac in particular – you can’t become a chief executive if you don’t have some sort of retail banking experience and this move is a big step in rounding out Miller’s investment-banking heavy CV.

Miller is well-regarded by King particularly for the work he has done around driving Westpac’s sustainability agenda through the institutional banking side. Here he will be given the challenge of driving Westpac’s new wealth management strategy now that the bank has opted to hold onto its top ranked $100bn Panorama platform rather than sell at a deep discount.

Stepping into Miller’s institutional role is another former Goldman Sachs banker Nell Hutton, who Miller hired two years ago to run Westpac’s financial markets business.

But the focus will be on the 51-year-old Yetton who is back in Westpac’s retail banking hot seat he held when Gail Kelly was chief executive. Yetton was eventually sidelined by Brian Hartzer and left the bank months after Kelly retired in 2015 to head up digital lending start-up SocietyOne. After leaving Westpac, Yetton was quick to point out that he delivered nine successive halves of profitable growth while at the lender.

Critically while at Westpac he worked closely with Peter King, who at the time was Kelly’s chief financial officer.

Westpac’s institutional banking boss Anthony Miller is being tested in a consumer area. Picture: James Croucher

Yetton later rejoined the big four banking world at Commonwealth Bank where he was put in charge of a jumble of businesses in wealth and mortgage broking to split up and sell.

Yetton was one of the first hires of King, who was promoted to chief executive to do the same job at Westpac – offload several business units from life insurance, auto financing to the BT corporate superannuation.

At Westpac Yetton’s “undertaker” role also involved M&A strategy and Westpac in recent years bought money management app MoneyBrilliant and seriously kicked the tyres on listed-payments play Tyro before walking away.

Yetton, a digital native, will be relishing the chance to make his mark again to drive returns across the retail banking brands in coming years. However the environment is going to be much tougher from when he was running the unit when margins were thick and lending was booming. For one, he will have to unlearn the cross-sell mantra from when he was coming through the ranks of BT Wealth under Rob Coombe earlier in his career. Now it’s all about cost management and securing market share as banking enters the toughest period since the global financial crisis. If he pulls off his profitable growth act again Yetton will be hard for Westpac’s board to ignore.

The moves come as there are changes also playing out in the boardroom. Westpac chairman John McFarlane will step down by December with time running out to name his replacement.

Earlier this week former insurance executive and one-time Wallaby Mike Hawker stepped down from the bank’s board.

Rio’s China warning

Mining major Rio Tinto’s latest quarterly update has turned decidedly cooler over the outlook for its biggest customer.

The tone has shifted from a recovery mode just three months ago, and this month’s downbeat growth figures from China confirmed the darkening mood sweeping the giant economy.

The next few months could determine the medium term path for China, where the property crash is still biting, and latest numbers show the economy is teetering on deflation. Authorities in Beijing have responded with monetary policy easing, but Chinese consumers are nervous.

All this means big implications for Australia, which may be one of the few developed countries to escape a recession in the coming 12 months. There has been some pullback in key commodity prices, although from high levels, and a marginal decline in China’s iron ore imports.

Rio said China’s reopening recovery has trailed off, while weakness in the export and property sectors is providing a drag on growth. Factory activity too remains weak, with exports under pressure.

Official data this month showed China’s GDP growth of 0.8 per cent in the June quarter against the previous three months and down sharply from the 2.2 per cent in the March quarter.

For the likes of Rio Tinto and BHP, the focus will be on how this slowing growth impacts forward iron ore orders. Prices dropped by 12 per cent over the past three months, while finished steel prices also fell away.

Even so, Chinese steel exports are running at 100 million tonne annualised, run-rates last seen in 2016 with lower prices spurring on global demand.

This week China outlined a series of demand side measures mostly aimed at spurring on the property market.

Rio said even with some drop in ore demand, seaborne iron ore shipments from Australia and Brazil are running close to all-time highs.

Meanwhile, Rio boss Jacob Stausholm’s focus on making Rio’s Pilbara operations more reliable is starting to deliver, with production increasing slightly through the quarter. Calendar year shipments have now moved to the top half of the original 320-335 million tonne range. While cost targets are holding steady.

However now it’s copper, Rio’s second-biggest unit and growth engine, that has been causing pressure as Rio had to pull back refined copper guidance and raise cost estimates. This was on the back of delays in the $US300m rebuild of the Kennecott copper smelter in the US that began in May.

Elsewhere, Rio has faced a first – disruption from bushfires. The miner pulled back production of iron ore estimates from its Canadian business due to the massive wildfires sweeping northern Quebec.

Rio has left its capital spending plans for calendar 2023 unchanged at around $US8bn, including works starting to ramp up at the remote Simandou iron ore mine in Guinea.