Major and regional bank boards will find succession planning is a hot topic in 2023, as chief executives at Commonwealth Bank and Bendigo and Adelaide Bank join ANZ’s chief teller in topping five years in their roles.
CEO succession planning and baton changes can also ricochet through a bank’s executive ranks if an internal candidate steps up and other contenders miss out and opt to leave. Rivals will also be closely guarding their top talent as the banking succession race at a number of lenders plays out.
Given the average CEO tenure of the ASX 200 is about five years, although a little bit longer in the financial services sector, investors will be closely assessing the crop of internal executive candidates among the banks. Outside and overseas candidates are also a possibility, albeit international candidates have had mixed results running the nation’s major banks in the past two decades.
ANZ chief executive Shayne Elliott – the longest serving of the big bank chief executives and the only one to survive the Hayne royal commission and financial crimes scandals – is likely to have his successor named sometime this year. He has been in the top job seven years and chair Paul O’Sullivan has helmed the board since October 2020, giving him ample time to get a handle on who is best placed to take over.
At Commonwealth Bank Matt Comyn started in the top job in April 2018 just ahead of the lender agreeing to pay financial crimes regulator Austrac a $700m penalty for breaches of anti-money laundering and counter terrorism financing laws.
NAB’s Ross McEwan started in his post in December 2019, when the lender was reeling from the fallout of the royal commission. Various scandals and the criticism by commissioner Ken Hayne claimed the job of his predecessor Andrew Thorburn. Given McEwan is 65 some analysts question how long he’ll stay given NAB’s turnaround is getting traction.
Westpac’s CEO Peter King similarly took over after a scandal when the bank was embroiled in millions of breaches of anti-money laundering laws in 2019. That followed the ousting of former CEO Brian Hartzer.
Now that Westpac’s chairman John McFarlane has flagged his retirement, persistent rumours about King’s tenure being cut short may subside. Before being drafted in as acting and then permanent chief executive King had announced his retirement from the bank. That decision was reversed when the explosive Austrac court action caused massive ructions at Westpac.
At the regional banks, succession is also a key topic for 2023.
Bank of Queensland is without a permanent CEO given the abrupt exit of George Frazis in November, after the board decided a new leader was required to steer the lender and improve its risk management framework.
In July, Bendigo Bank CEO Marnie Baker will have notched up five years in the hot seat, meaning the board will also assess the suitability of the lender’s front bench and which external candidates they should keep an eye on.
Succession planning is a key task for any ASX board, but bank boards have an added regulatory layer, meaning there is little or no room for error.
A report by PwC, released in 2021, found a “common roadblock” to productive CEO succession was a lack of board consensus about how the company’s near and longer-term strategies should affect the decision. “Finding common ground starts with assessing the factors most likely to impact the business over the next three to five years, such as changing customer demands, climate change, and technological advances,” it said.
In a startling finding PwC noted too many boards had only a “vague notion” of how they would respond to a sudden chief executive departure.
“Many boards aren’t fully prepared for CEO departures despite succession planning being one of their primary responsibilities,” the report said.
Russell Reynolds Associates last year told this columnist leading boards were more actively assessing CEO succession four years out from an anticipated changeover, to better prepare internal candidates.
Tour of duty
Macquarie Group has started alerting investors and analysts about a US trip it will host in early March. The roadshow will span operations in Philadelphia, New York and Houston across divisions including commodities and global markets, asset management and Macquarie’s capital unit. Exact details about which executives will front up will be known near the end of the month.
It’s the first dedicated investor tour of its type by Macquarie to the US. The trip makes a lot of sense given at the group’s interim results the Americas accounted for 38 per cent of total income, well ahead of Australia and New Zealand at 28 per cent, Europe the Middle East and Africa at 24 per cent and Asia at 10 per cent.
The trip will be preceded by Macquarie’s third-quarter trading update in February, around the time of its scheduled annual operational briefing.
Investors travelling to the US will no doubt have a spate of questions about volatility in energy and financial markets through 2023. Other topics investors may want clarity around are how merger and acquisition volumes may fare this year – after a soft 2022 – and whether Macquarie expects recessionary conditions to throw up buying opportunities.
Consensus estimates have Macquarie reporting a full-year profit of $4.32bn for the 12 months ended March 31. That compares to $4.71bn posted for 2022, a record.
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