BoQ delays CEO appointment amid shaky global markets
The bank says volatile global financial markets were a factor in the bank delaying the appointment of a permanent chief executive following the shock departure of George Frazis last year.
Bank of Queensland says volatile global financial markets were a factor in the bank delaying the appointment of a permanent chief executive following the shock departure of George Frazis last year with global capital markets facing a raft of fresh challenges.
The Brisbane-based bank’s former chairman Patrick Allaway was named on Monday as its new chief executive, although he will only remain in the role until December 2024.
Mr Allaway said it had been BoQ’s intention to have an executive permanently in the top job by now, but given volatile financial markets it was best to continue the search, both externally and internally, for a candidate.
“It will give us the stability and continuity given current markets,” said Mr Allaway. “This will allow us time to continue the search externally for a wider pool of candidates, and also allow time to build up internal candidates.”
He said the Australian banking system remained strong despite global jitters caused by the collapse of Silicon Valley Bank and the takeover of Credit Suisse.
“We have a strong, stable banking system in this country, but clearly capital markets globally are facing difficulties,” Mr Allaway said. “The wholesale market is challenging, but we have very strong domestic deposits. BoQ itself in a strong capital position.”
Mr Allaway will serve as managing director and CEO until December next year on an annual remuneration package of $1.5m while a search for a “long-term” CEO continues.
Non-executive director Warwick Negus was named as the bank’s new chair.
BOQ’s new chief said there was hope for a pause in interest rates increases after the RBA this month hiked borrowing costs to a new high of 3.6 per cent, in a fresh blow to mortgage holders already struggling under the weight of a series of rate rises.
Still, BoQ said it had seen no increase in mortgage stress among its customers. “We are in uncharted territory (in terms of the economy), but we are still hopeful of a soft landing,” said Mr Allaway.
“Clearly we are in for more difficult times with cost of living increases.”
Mr Allaway’s executive career includes stints with Citibank and UBS, besides board roles at Metcash, Fairfax Media, Woolworths South Africa, David Jones, Country Road Group and Nine Entertainment.
He hosed down speculation of a merger between Bank of Queensland and Bendigo and Adelaide Bank, creating a $10.3bn fifth banking pillar. “We are not in talks with Bendigo Bank even though we know there has been speculation about that,” said Mr Allaway.
“We will continue to look at M&A opportunities, but we are happy with our stand-alone strategy. We have a proud 150-year history which we want to continue.”
Analysts say a merger would mean an expanded branch network and reduced costs. But both banks have implemented stand-alone strategies to modernise their IT platforms, as well as develop their millennial brand and digital offerings.
BoQ has seen a string of executive departures over the past 18 months. Along with Mr Frazis others heading for the exits include financial boss and operating chief Ewen Stafford, chief customer officer Danielle Keighery and head of business banking Fiamma Morton.
Flamboyant Mr Frazis, whose high-society wedding was attended by Malcolm Turnbull, Carla Zampatti and Alan Joyce, left the bank after the board decided the CEO of three years was not the right fit for the 149-year-old Brisbane bank.
Mr Frazis, who previously held executive roles at Westpac and NAB, inherited a bank with antiquated loan approval systems, slow customer service and lagging digital offering
Mr Frazis joined BoQ in the top job in September 2019 – from Westpac – and had been implementing a turnaround plan at the bank, which included overhauling and replacing legacy technology systems. He also steered the acquisition of ME Bank, which completed last year, and was seeking to revive BoQ’s growth.
BoQ in 2021 purchased ME Bank, formed in the 1990s as a “digital bank” with no physical branches, for $1.32bn, allowing it to roll out a national cloud platform and giving it the financial strength to invest further in modernisation.
Mr Allaway in December defended the $1.325bn acquisition at the annual general meeting, saying it had provided an element of diversification for the Queensland-based lender.
A process of integration was progressing, according to the new chief.
“Our digital program is continuing with plans to add ME bank to the BoQ app,” said Mr Allaway. “BoQ has several programs underway to build a leaner more agile and digitally enabled bank.”
Addressing the lack of a Queenslander on the BoQ board, Mr Negus said the search was on for a new director and “if possible” it would be good to have a Queensland-based person.
Founded in 1874 in Brisbane, BoQ has been called the “Bank of Sydney” by some detractors because of its predominance of Sydney-based directors and executives.
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