Banking royal commission: NAB’s Henry needs to keep it simple

NAB chair Ken Henry may be smart but on board duty he has lost the plot, and needs to learn his role as a company leader.

NAB chairman Ken Henry leaves the banking royal commission in Melbourne. Pic: David Geraghty

NAB chair Ken Henry is as smart as a tree full of owls but on board duty he has lost the plot and needs to learn his role as a company leader.

As noted yesterday, Henry told the banking royal commission that the board’s duty is wider than simply to shareholders.

What a load of nonsense.

Ben Butler was correct in his comments about Henry today and as one commentator put it “Ken Henry says it will take 10 years to change NAB’s culture - if he stays it will take 100 years.”

Henry went on to say the NAB board has a duty to the community, regulators etc, which is all true.

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The point is if the board does that bit well then it is serving shareholders well, by providing a sustainable future for their company.

Yes, a board needs to provide oversight and set strategy but if it is to serve shareholders well then it should engage with wider stakeholders.

The same goes with pay. Shareholders want long-term performance which means executives should get turn-up-to-work pay and long-term bonuses which vest over five years or more to align with long-term shareholder gains.

Somewhere in the testimony of both Henry and chief executive Andrew Thorburn the concept that shareholders want long-term performance was lost. More to the point, their role in leading that long-term performance was lost.

If you steal from customers for short-term profit ultimately you destroy long-term value.

Look no further than the AMP which has compounded the issue over the years by buying at the top of the market and selling at the bottom, as it is doing now with its life insurance business.

Henry’s disappointing testimony at the commission was clouded with intellectual nonsense at a time when the industry is trying to get back to simplicity, which revolves around serving customers well.

Is there a reason Apple why is the most value company in the world today? Yes, it has engaged with and served its customers.

That is what banks should do as well.