Ross McEwan named new NAB chief executive, says it’s not a ‘poisoned chalice’

Incoming boss Ross McEwan vows to repair NAB’s battered reputation but says his job is not a “poisoned chalice”.

Newly appointed NAB CEO Ross McEwan speaks to media in Melbourne this morning. Picture: AAP

Incoming National Australia Bank chief executive Ross McEwan pushed back on suggestions the role is a “poisoned chalice”, as he vowed to repair its battered culture and standing with customers.

The Royal Bank of Scotland boss was speaking after being named to lead the bank following the loss of former CEO Andrew Thorburn and chairman Ken Henry in the wake of the Hayne royal commission.

Speaking to journalists, Mr McEwan said despite the damage inflicted during and after the royal commission he didn’t consider NAB a “broken bank”.

“We can repair the things that went wrong with this bank over the next few years,” he said. “We need customers trusting us... it’s not a poisoned chalice.”

Mr McEwan said he wanted NAB to improve on customer service and staff engagement, which if managed the right way would also deliver strong returns.

Mr McEwan is Royal Bank of Scotland CEO but announced in April he was stepping down from that post. He may not start in the NAB top job until April 2020.

At NAB, Mr McEwan will confront a string of challenges after the bank endured a spate of scandals during the royal commission.

He has returned RBS to profitability after a UK government bailout and a tumultuous period following the global financial crisis. But RBS still has a poor customer service ranking after his more than five years as CEO.

On that point, Mr McEwan said: “Ten years of damage is pretty hard to get over.”

Announcing the new CEO today, NAB interim CEO and chairman-elect Phil Chronican said Mr McEwan was the “ideal leader” to transform the bank’s operations and culture.

The bank said Mr McEwan – who resigned from RBS in April – would start at NAB no later than the same month next year. His appointment is subject to regulatory approval.

His fixed salary has been set at $2.5 million a year with the ability to earn a short term bonus of up to 150 per cent of that. Long term incentives are pegged at up to 130 per cent of the fixed salary but vest over four years.

Mr McEwan’s total pay adds up to a maximum annual package of $9.5 million, if he meets the top end of all the performance hurdles.

He is not expected to be paid any NAB sign-on bonus, subject to the RBS board’s treatment of his exit package.

Mr McEwan has led a turnaround of RBS after its government bailout.

RBS chairman Howard Davies told the RBS annual general meeting earlier this year Mr McEwan’s “successful execution of the strategy” to refocus the bank on its core markets in Britain and Ireland helped deliver “one of the biggest UK corporate turnarounds in history”.

RBS returned to profit in 2017.

Ross McEwan led RBS’s turnaround after it was bailed out by the British government.

Mr McEwan has spent more than five years as RBS CEO and prior to that led its retail division. Before RBS he was an executive at Commonwealth Bank but missed out on the top job to Ian Narev.

Mr Chronican said NAB had secured a senior, global financial services executive with “deep experience in international markets and longstanding knowledge of the Australian banking environment”.

“Ross McEwan is the ideal leader for NAB as we seek to transform our operations and culture firmly around leading customer service, experience and products,” he added in the statement.

“Ross brings a compelling range of experience across finance, insurance and investment with a track record of delivering important and practical improvements for customers. RBS has been through many of the same challenges which NAB now faces around culture, trust and reputation.

“We have secured a well proven CEO and reached agreement on an appropriate remuneration package when compared with domestic and international peers and other sectors.”

Mr McEwan said in a statement: “It is a privilege to return to Australia and lead NAB at a crucial time for the bank, its customers, employees, shareholders and the broader community.

“There are a number of areas where NAB can extend its lead, such as business banking, agriculture and health, and other areas where I believe we should consistently lead such as customer service. We must also meet and exceed the expectations of our many stakeholders.

“It is essential that I protect and accelerate the bank’s transformation program. The community also expects a higher level of accountability and transparency from the banking industry. Australians deserve NAB to be a world class service provider.”

Analysts at Credit Suisse said they expected a positive response to the NAB CEO appointment given it was external and that Mr McEwan had experience running a large bank.

“An end-of-the-year start date would sit well with the current transformation program which would be two years into a three-year program,” they said. “This would give Mr McEwan 12 months to view the business and come up with his strategy and vision. We would expect an announcement around strategy prior to the end of the current program, sometime in 2020.”

Mr McEwan replaces Mr Thorburn, who exited NAB in late February after four and a half years in the top job. Mr Thorburn and chairman Mr Henry were victims of the Hayne royal commission, which lambasted NAB’s lack of accountability for governance and compliance failures.

Former NAB CEO Andrew Thorburn resigned in the wake of the Hayne royal commission. Picture: Stuart McEvoy

Today’s statement said Mr Chronican would transition from interim CEO to chairman in mid-November, replacing Dr Henry. Interim management arrangements, to appease the Australian Prudential Regulation Authority, would be put in place if required.

Dr Henry indicated his intention in February to resign from the board once the permanent CEO was appointed. He joined the board as a director in 2011 and became chairman in 2015.

The Australian today revealed the NAB appointment was imminent with Mr McEwan among the final shortlist.