Anthony Miller is the external-candidate-turned-internal as he prepares to take charge of Westpac in coming months with a mandate to rebuild the bank’s glory days as a business lending powerhouse.
Westpac had defined itself as the go-to business and institutional bank under the legendary and highly conservative chief executives Bob Joss and David Morgan. But the nation’s oldest bank lost serious momentum as it took more than a decade to digest St George and pushed deeper into wealth management.
Former investment banker Miller was the leading internal candidate to replace outgoing boss Peter King, allowing Westpac to make the transition as smooth as possible and put the trauma of the Austrac implosion further behind it.
The question is, after more than four years of intensive repair work and with more still to be done, is Westpac finally ready to compete again?
That’s an emphatic “yes”, Miller tells The Australian.
He says it was right the bank had been focused on delivering what was needed to rebuild after Austrac. King, he adds, has done an “immense job” cleaning up the business and doing it in a way that meets the standards expected.
“Now we’ve built those foundations, let’s start to drive them. It’s a real opportunity to drive the business from here,” Miller says.
After joining Westpac four years ago as institutional boss, Miller comes to the bank as a relative cleanskin. He sees Westpac’s future grounded in business banking, and the board under new chairman Steven Gregg has backed him to get there. The internal process means it will be a smooth handover and Miller will continue to run with King’s two milestone projects covering technology and culture.
Retail banking journeyman and Westpac’s consumer banking boss, Jason Yetton, was also in the mix for the top job and external contenders were considered.
Gregg says Miller’s strategic mindset and focus on performance was something that really stood out against other candidates, making it a clear-cut decision for the board.
It’s a truism in banking that the person passed over for the top job usually leaves after a few months. There is no question Yetton also has plenty of ambition, so Miller’s first challenge will be to keep his executive team intact or risk losing much-needed momentum in retail, which is already the new CEO’s vulnerability.
Miller’s appointment comes just months after National Australia Bank elevated Andrew Irvine, a career business banker, to run the big four rival in a clear signal of intent. Like Irvine, Miller brings a global perspective to the role.
At the smaller end of the scale, former UBS banker and now Bank of Queensland boss Patrick Allaway has also called out business as a place to be in, while CBA is using its cutting edge technology to carve out gains in that space.
The intense focus on business is due to profit margins and return on capital being much higher in business than selling mortgages, where the costs of distribution are high and gains are steadily eroded by mortgage broking competition and the likes of nimble rival Macquarie. If there was any doubt about the strategy, the two leaders in business banking – NAB and CBA – generate the highest shareholder returns of the big four by a long shot.
The new Westpac chief comes from outside the banking hub of Sydney or Melbourne, growing up in Canberra’s suburbs, and he had a stint of high school and then university in Brisbane.
King’s legacy
Miller is widely regarded as an unassuming but quietly determined executive. And given he grew up in a family of six brothers and sisters, he had an early taste of how to build consensus.
He replaces outgoing boss King, the former finance boss and three-decade veteran who was thrust into the top job at the very end of 2019 in the midst of Westpac’s worst crisis in three decades.
King has spent most of his time since trying to fix deeper technology issues exposed by Austrac and rebuild a unified bank.
While the buyout of St George more than 15 years ago made Westpac the second-biggest home lender, it has struggled to make inroads into Commonwealth Bank’s retail dominance. In fact, Westpac has given up ground in some product lines and there’s more work be done on technology investment and becoming a more efficient bank for its size.
Miller points out that combined, Westpac’s business bank and institutional banking today generate more earnings (more than half) than consumer banking alone, which comes in at a third.
“The future suggests that will continue, and we see a lot of upside in what we can achieve in institutional banking and business banking. They are both businesses that Westpac has a fabulous legacy in,” he says.
“We want to continue to challenge those businesses to return to where they were in the past, which is leading across the marketplace.”
He has some way to go, with Westpac’s institutional business not yet firing to the extent it did in recent decades, and ANZ the market leader in that space. At the same time there is a fierce battle under way in small to mid-sized business banking, with market leader NAB throwing everything at it and more recently CBA using its muscle to grab share from rivals.
Global perspective
A former Goldman Sachs banker and Deutsche Bank Australian boss, Miller is the fourth chief executive for Westpac in under a decade, highlighting the long-term challenge the bank has had in getting much-needed stability across its executive ranks.
Brian Hartzer may have survived the Hayne banking royal commission, but his tenure as Westpac boss was cut short in 2019 by the massive Austrac anti-money laundering legal action and the damning investigation that followed by bank regulator APRA.
That is not to say Miller is turning down the heat on retail banking, but he wants to approach the business more like an investment banker, which is about linking the dots between products to get the full share of customer business.
“So that’s a little less obsession around have we got our mortgage product, plus the transactional account for the customer, plus the adjacent services such as cards or personal loan,” he says.
“Fortunately for me, that defines how you deliver in business and institutional banking, which is you’ve got to have a whole-of-customer approach.”
King, who was about to retire, stepped into the top job at the very end of 2019 and has spent nearly his entire tenure internally focused and attempting to fix Westpac’s culture, which had missed the risk problems of money laundering. Westpac is in the recovery ward, and this year its $1bn additional capital penalty was lowered to $500m. The next step will be for Miller to prove Westpac is ready to get the penalty removed entirely.
King too has bitten the bullet on the bank’s much underdone technology, committing billions of dollars to untangle and remove hundreds of duplications. The project, dubbed “Unite”, is designed to make the bank more efficient, and digital fit will probably stand as one of the most important pieces of work since the buyout of St George. It will need billions in investment over the years.
From the outset King wasn’t regarded as the long-term chief executive. But he certainly stepped up to tackle some of Westpac’s internal demons head on while slashing costs. The reality is the much-needed work and repairs from the Austrac crash meant Westpac wasn’t able to focus on external battle against its traditional rival CBA.
Significantly, Miller was King’s first executive hire in early 2020, luring him from the big-paying Deutsche Bank Australia to rebuild the institutional business.
The appointment was important for King because it came amid some of the bank’s darkest days and sent a message that outsiders saw a path forward for Westpac.
Inside Westpac King had quietly championed Miller and knew his institutional banking boss was the real deal when he started getting feedback from other chief executives in the market saying Westpac was back.
King had also noticed staff engagement rose higher in the institutional bank than anywhere else, and the third point was when Miller launched the Westpac One transactional platform for big corporate clients.
Miller says he will take the running on Unite as well as King’s Core cultural overhaul. Both, he says, will mean Westpac can deliver more to customers.
“Those (programs) are critical to enable us to be what we want to be – the ambition for our bank to be number one banking partner through life.”
johnstone@theaustralian.
Howzat! Behind DAZN’s quest to become Netflix of sport
The UK sports streaming operator has big plans for the way the world watches sport – and Foxtel is set to become a key part of this.
Westpac admits overcharging nearly 25,000 NZ customers
The banking giant faces a hefty fine after it misled NZ customers entitled to advertised discounts and overcharged some of them.