NAB board panicked in face of pressure

After serving the bank well for many years, Thorburn and Henry were dumped after just three paragraphs in Hayne’s report.

19/12/2018 NAB CEO Andrew Thorburn and Chairman Ken Henry chat before the AGM at Melbourne Convention Centre.Picture : David Geraghty / The Australian.

The question left open by this afternoon’s extraordinary action at NAB is just what more does the bank know about its leadership team, because surely respected corporate leadership would not change based on a couple of opinionated paragraphs in the final royal commission report.

It is clear the board panicked in the face of pressure.

Both Andrew Thorburn and Ken Henry have served the bank with distinction for several years and have been dumped on the basis of three paragraphs in the royal commission’s final report.

Ken Hayne must wonder at the power he possessed when penning those words, singling out two individuals in a lengthy tome covering a litany of misdemeanours by an entire industry.

That is why there must be more to it than was presented.

NAB now joins AMP as the second iconic financial service giant to change its top two roles on the back of the royal commission.

Those who have dismissed the report as a non-event will now see a new reality.

Henry had vowed to stay on to prove Ken Hayne wrong but the market pressure on the NAB chair would only have intensified if he had pushed his chief executive under a bus.

He too had made blunders, namely the record vote last December against his remuneration report, which contrary to his finely worded statements, showed little respect for the changes expected by the community in terms of bank pay.

Still, what is truly extraordinary is how the market pressure leading to this action has built in a matter of days in the wake of the damning words from Hayne.

The market has turned on a dime.

Thorburn has served as NAB chief for four years and is widely respected, liked and supported in the market and, while that doesn’t necessarily make him a good leader, it does stand in stark contrast to the manner of today’s swift dismissal.

The same fund managers who have backed him to date have turned on a dime because of a few paragraphs written by lawyers with little experience in banking.

On Tuesday the bank was rejecting Hayne’s assessment, maintaining it was proceeding at pace to reform its culture, a claim rejected by Hayne.

But there were already questions over Thorburn’s tenure given reports about former staffer Rosemary Rogers and reported theft from the bank and judgment calls like the ill-fated long service leave due this month.

Thorburn cancelled that on Wednesday but he will now get an enforced break.

Ken Henry and the board had agreed to the unheard of long service leave and made clear they expected him to return at least until Hayne’s report landed.

The concept of a staggered departure for the purposes of continuity is a nonsense — what matters more is change happens quickly and likely long-term chair Phil Chronican and chief executive Mike Baird or perhaps Medibank’s Craig Drummond get moving quickly.