Suncorp nod turns focus on ANZ succession plan for its CEO

ANZ chief executive Shayne Elliott has held the position for the past eight years. Picture: Arsineh Houspian.

The Australian Competition Tribunal’s approval of ANZ’s long-running $4.9bn takeover bid for Suncorp’s banking arm is a game-changing event for the bank and looks like being a key part of CEO Shayne Elliott’s legacy.

The deal still has some way to go, with the market awaiting a response from Bendigo and Adelaide Bank, legislative changes needed in the Queensland parliament and approval needed from the federal Treasurer, Queenslander Jim Chalmers. But given that the deal has the potential to be finalised by the middle of this year, the tribunal’s verdict will raise questions about how long the 60-year-old Elliott will stay in the job he has held for the past eight years.

National Australia Bank chief executive, fellow New Zealander Ross McEwan, was 62 when he took on the top job at that bank in 2019, and will be 66 when he retires in April.

The finalisation of the Suncorp bank deal, which was announced in July 2022 as part of a move to accelerate the growth of ANZ’s retail and commercial businesses, will mark the beginning of a long period of integration of the Queensland bank into the broader ANZ network.

Bank integrations are not easy thanks to different cultures and, more critically, different IT systems, which was a key issue in Westpac’s takeover of St George.

Announcing the Suncorp deal 18 months ago, ANZ itself suggested it could take several years.

The question is whether Elliott would want to stick around for those years to finally see it through, or whether later this year or sometime next year would be a good time to hand the challenge of the next stage to his successor.

The New Zealand-born Elliott was chief financial officer of ANZ in September 2015 when he was confirmed as the person to take over from Mike Smith in January 2016.

Elliott’s low key, grassroots, attention-to-detail style was what the bank needed as its board realised that it needed to trim its grand ambitions about being a “super regional” bank, with a big focus on Asia.

The contrast between the global banker – the formerly Hong Kong-based Mike Smith – and the numbers-orientated Elliott could not have been greater.

Elliott has steadied the ship, trimmed its global footprint, and sold down its wealth management operations and many other parts of the bank, as he sought a much greater domestic focus.

He has turned the bank’s institutional arm around but found progress in the Australian retail and business banking market much harder.

The domestic banking market in Australia, as the tribunal noted on Tuesday, is fiercely competitive, and each point of market share is fought over by the big four as well as Macquarie Bank – a strong competitor in a specific part of the mortgage market – and smaller regionals like Bendigo and Adelaide Bank and Bank of Queensland, not to mention other players in niche areas like ­Rabobank.

The three top competitors for the job are internal candidates: the head of the institutional bank, Mark Whelan, who has been instrumental in turning his division around; chief financial officer Farhan Faruqui; and the head of the retail bank in Australia, Maile Carnegie.

Whelan and Faruqui are considered the most likely contenders given their extensive banking ­experience.

Whelan has been with the bank for more than 20 years, heading its institutional bank since February 2016. Faruqui brings a strong international background to his role, having been group executive for international banking, based in Hong Kong, before Elliott moved him into the chief financial officer role in October 2021.

He joined ANZ in 2014 after a 23-year career with Citigroup, one of the great training grounds for international bankers.

Carnegie has only been in banking for less than eight years, having joined the bank in July 2016 as group executive, digital banking. This followed stints as Australian chief executive of Google and a long stint with global consumer products company Procter & Gamble. She has been head of ANZ’s retail bank in Australia since March 2022.

While there is logic in the Suncorp deal, not everyone sees it as having the same upside as Elliott, with some analysts saying ANZ shareholders would have preferred a $5bn return of capital.

“We expect completion of the acquisition to weigh on ANZ’s relative share price performance as it reduces the magnitude of potential capital return,” Azib Khan, the executive director for banks and research at Evans and Partners, said in a note to clients.

The key to the success of Elliott’s vision for Suncorp will be in its execution.

Michael O’Neill, portfolio manager with fund manager Investors Mutual Limited, said bank mergers were “very tricky”.

“There aren’t many examples of successful integrations,” he told The Australian. “The success of acquisitions in the banking space is determined more by timing and price. “The transaction does provide an improved mix benefit, as retail banking is a higher and more sustainable return-on-equity bus­iness than institutional banking.

“And it does add to mortgage market share in Queensland, while ANZ’s relative strength is in Victoria and offshore in New Zealand. With the long tail of integration ahead of ANZ, now that it comes closer to achieving Elliott’s goal, the question is who will be the one around for the longer term to make sure it all works.”