McEwan vows to keep a lid on NAB costs

Simplicity, faster decision-making, more accountability and keeping a lid on costs are at the heart of Ross McEwan’s plan for NAB.

The National Australia Bank’s new CEO Ross McEwan has vowed to keep a lid on costs. Picture: Hollie Adams

Simplicity, faster decision-making, more accountability and keeping a lid on costs are at the heart of Ross McEwan’s new blueprint to improve National Australia Bank, as it endures the COVID-19 crisis.

Mr McEwan outlined several key planks of his no-frills strategy on Monday and appointed a new head of retail banking, reflecting a shift in focus rather than a sweeping restructure.

“We are in the right businesses for this bank and for this economy and for New Zealand,” he told The Australian. “Our positions in these markets are better in business banking and corporate than they are in the retail sector, but we want to make sure we stay the best and the biggest player in the business banking sector.

“Our strategy is around restructuring the business mildly, so that we get much better accountability end-to-end and then more focused businesses.”

Mr McEwan said NAB was “too slow, far too complex” and management accountability hadn’t always been clear.

“There are compelling opportunities to create long-term value.”

He appointed the bank’s chief customer experience officer Rachel Slade to lead personal banking, replacing Mike Baird who parted ways with NAB earlier this month. Ms Slade joined NAB three years ago from Westpac.

Nathan Goonan was appointed group executive for strategy and innovation, in charge of transformation and all merger and acquisition activity. He rejoined NAB in 2013 and was most recently general manager of strategy and ­development.

NAB’s digital arm Ubank becomes one of five key divisions and will double down on customer ­acquisitions.

NAB’s new appointments were coupled with plans for executive and board pay cuts to share the COVID-19 pain being borne by shareholders in the form of lower dividends, bolstered capital levels and higher loan losses. The bank said board members would see their base fees lowered by 20 per cent in the latter half of its 2020 year, while Mr McEwan will also take a 20 per cent cut in second-half fixed pay. The chief executive and his leadership team will also forgo any short-term bonus payments for the 2020 year, which is ruled off on September 30.

Ethical Partners Funds Management investment director Nathan Parkin said NAB’s priority in the current environment was managing an expected spike in bad loans. “It (the new strategy) sounds very sensible, but I imagine the near term is more focused on those loans being carried over … on interest holidays,” he said

Mr McEwan said he was working with MLC boss Geoff Lloyd to ensure a separation of the business, and said a global search was under way to replace outgoing head of business banking Anthony Healy. “It’s a little bit more difficult under a virtual world … we are doing interviews on Zoom and the like,” Mr McEwan said.

“I’m happy with how it’s progressing but I’m in no rush.”

He also wants one person across NAB to take responsibility for home loans across the organisation, but admitted it would take “some time” to consolidate the bank’s multiple processing systems. The strategy involves unpicking some of NAB’s centralised services and giving business units more accountability, after the Hayne royal commission shed light on poor compliance practices and a lack of responsibility at the bank.

“More end-to-end, more ability for people to make a decision and not have to have lots of people in the room second-guessing them,” Mr McEwan said.

The strategy hinges on four areas including safety through the crisis, simplicity and being digitally enabled, customer relationships and long-term decisions and ­outcomes.

“There are not a lot of things on the page here and that’s the point,” Mr McEwan said of the strategy, after taking the CEO reins in December. It follows a four-month review led by NAB executives and aided by Bain & Co, with areas of improvement including removing complexity and boosting market share among younger customers.

The bank conceded removing 4000 full-time roles under previous CEO Andrew Thorburn’s three-year strategy would be difficult, but it committed to keeping costs flat.

“We will live within our means … that is not negotiable,” Mr Mc­Ewan added.