BoQ’s new CEO George Frazis has his task cut out

Bank of Queensland’s incoming chief executive, George Frazis. Picture: Britta Campion

Bank of Queensland’s incoming chief executive, George Frazis, has a laundry list of tasks to get through after his September check-in.

A key priority for Frazis will be to appoint a permanent executive to run BoQ’s business banking operations. BoQ’s business division had higher total income — at $287 million — in the bank’s interim results than the retail unit. The business division also delivered positive loan growth across its product lines.

A search is under way following the departure of Brendan White late last year to take up the role of CEO of Cash Converters, but Frazis will have the final say on the candidate.

Acting in the position is general manager Doug Snell, who fronted the Hayne royal commission on behalf of BoQ in 2018.

The BoQ board and Frazis are said to be prioritising a targeted business banking strategy as they look to formalise a blueprint for the next three years.

The other executive Frazis will be keeping a close eye on is Anthony Rose, who will continue to act as CEO until the former’s arrival. Sources said Rose had committed to stay on at BoQ at least for the transition period and perhaps beyond that.

Investors Mutual senior portfolio manager Simon Conn certainly hopes Rose stays the course.

“I hope they work hard to retain him,” he says, labelling Rose a “quality operator” who has earned the respect of investors.

Before taking the interim CEO reins he was BoQ’s operating chief and before that, finance boss. Frazis will also need to take over negotiations with the prudential regulator over the different capital requirements for regional banks versus their larger counterparts. This is an issue that the Australian Prudential Regulation Authority is open to rethinking.

Getting the right digital and automation technology and strategy in place is something Frazis flagged yesterday as a priority.

It’s an area BoQ has already called out as foundational and “must do” investments to core systems, coupled with a refresh of digital platforms used by customers. Dragging the chain on investment in digital is a big pressure point, particularly as customers start to demand more functionality and services over their phones.

If this week’s Morgan Stanley Australia Summit and prior research is any guide, banks can’t ­afford to stand still on that front as big technology firms linger in the shadows wanting a bigger piece of the customer relationship.

Morgan Stanley analyst Andrei Stadnik has released research saying the major banks had three to five years to fend off technology ­giants such as Apple and Google in the payments market or risk losing $22 billion of industry ­revenue. It’s an area Frazis has proved strong on at St George, then Westpac’s multiple customer brands.

In the consumer bank, Frazis also made other service-related and efficiency changes.

They included a review of Westpac’s 120 products, closer case management of longstanding complaints and the introduction of a service promise based on the principles of the Ritz-Carlton, which tech giant Apple also benchmarked itself against when setting up stores.

Building out the Virgin Money digital bank would probably serve as a way to acquire new customers and test concepts.

BoQ’s model is also somewhat unique in that it has a network of owner-manager branches.

Given the bank’s latest results, there was clear evidence of BoQ struggling to attract prospective managers and keep up with natural attrition — Frazis would want to run a keen eye over the specifics of the model.

Rose took some action on that issue already by overhauling the share and pay structure for owner-managers.

As Frazis fills one of the empty local CEO seats, the focus shifts to Suncorp and National Australia Bank.

NAB chief watch

The NAB CEO search appears to be bubbling along.

As an interesting aside to that process, this column confirmed that outgoing Royal Bank of Scotland boss Ross McEwan has quietly sold his apartment in Pyrmont, Sydney. The $3.2m sale was completed late last month and earned him a tidy profit.

The property divestment has spurred two theories, the first being that McEwan may be looking for a home in Melbourne if he is the hot favourite to get the top gig at National Australia Bank.

The other, less conspiratorial, theory says the sale signals that McEwan may not return to Australia any time soon.

He and Medibank CEO Craig Drummond are considered well placed to secure the NAB role.

Ireland has also been a hunting ground for NAB and its CEO headhunter, Russell Reynolds.

Said to be on their radar is Bank of Ireland chief Francesca McDonagh, who was appointed to that role from HSBC in 2017.

At HSBC her career spanned 20 years, during which she held a number of management roles, including group general manager and regional retail banking and wealth head for the UK and Europe and chief of personal financial services in Hong Kong.

Internally, NAB business banking boss Anthony Healy and customer boss and former NSW premier Mike Baird are said to be lead CEO contenders.

In the meantime, chairman and acting NAB CEO Phil Chronican is getting on with the job.