Squeezing growth in mature market will challenge Hartzer

AS Brian Hartzer takes charge of Westpac next year his challenge will be to continue to squeeze outsized earnings growth from a mature banking market.

Brian Hartzer is the CEO of Westpac's Australian financial services.

AS banking journeyman Brian Hartzer takes charge of Westpac next year his challenge will be to continue to squeeze outsized earnings growth from Australia’s mature banking market.

The post-global financial crisis generational change among the nation’s top bank executives is almost complete with new chief executives taking charge at Commonwealth Bank and National Australia Bank in recent years.

It was retiring chief executive Gail Kelly that played a pivotal role in luring Hartzer — a former top ANZ executive — back to Australia two years ago to run Westpac’s sprawling retail banking businesses. Even then he was being marked to take charge of the nation’s second biggest bank.

Still, Hartzer’s ascension to the top job at Westpac was no means a done deal at the time. The second firm candidate in the mix for the chief executive job was Westpac’s head of institutional banking Rob Whitfield.

Among Hartzer’s more immediate challenges will be to ensure the well-regarded Whitfield remains in the role. More broadly he faces challenges in negotiating industry changing technology and fallout from the David Murray chaired Financial Services Inquiry with the prospect of new rules curbing shareholder returns.

Still, Hartzer’s stint running the vast Royal Bank of Scotland retail banking division in the UK from late last decade gave the one-time banking consultant frontline experience in running a retail bank in a market still reeling from the GFCs.

At RBS, which had to be rescued by the UK government, Hartzer took charge of a network of more than 2200 branches — more than two and a half times the size of Westpac’s.

But a desire to be back in Australia and an opportunity at Westpac paved the way for a return to the Australian banking market.

His experience in the UK also comes on the back of his stint last decade building up ANZ’s retail banking business into one of the best performers among the big four — dominating rivals at the time in terms of customer satisfaction and product innovation. It is telling that since his exit from the Melbourne-based bank in 2009, ANZ’s big four rivals caught up and eventually overtook it on many of these measures.

The US-born Hartzer was interviewed for the top job at ANZ in 2007, however the Asia-focused chairman at the time, Charles Goode, wanted a chief executive that shared his expansion ambitions. So the ANZ job went to HSBC banker Mike Smith.

Since joining Westpac in 2012, Hartzer oversaw Westpac’s key divisions — St George, BT Wealth and its flagship retail banking operation. Together they generate more than $5 billion in earnings, or around two-thirds of Westpac’s annual profit.

Hartzer starts as Westpac chief executive from February next year.