The five you need to watch in business during 2019
Next year will be a big one for new and known faces in business, regulation and politics.
Francesco De Ferrari
New AMP chief Francesco De Ferrari arguably has the most difficult job among his ASX peers in 2019, as the embattled wealth group looks to survive in a post- Hayne royal commission era.
AMP is also staring down the barrel of a handful of class actions that may be merged, and a growing bill to repay customers after a spate of mistakes including charging advice fees for services that were not provided.
De Ferrari, who took the helm on December 1, needs to roll up his sleeves and make the hard decisions on what AMP will look like in the future. The company has agreed to divest its life insurance arm in a $3.3 billion transaction, but he’ll no doubt run the ruler over the advice unit, bank and infrastructure and real estate arm AMP Capital.
De Ferrari, a Credit Suisse executive whose roles there included running the Asia-Pacific private banking business, moved quickly this month to hire his former right hand man Alex Wade to lead AMP’s advice unit.
“The pressure and the responsibility is there to get it right,” De Ferrari said on day three in the role, throwing his weight behind AMP’s vertically integrated model, albeit with the right safeguards. He will also spearhead AMP’s response to the royal commission’s final report, which is due to be submitted to the government by February.
Commissioner Kenneth Hayne will have something to say on the topics of how to best provide financial advice and whether vertical integration, in which financial services groups manufacture and sell products, is a viable model.
The royal commission led to the early exit of former CEO Craig Meller and, after revelations of board interference with an independent report to the corporate regulator, he was followed by chair Catherine Brenner.
Now it’s De Ferrari’s turn to come up with a plan to resurrect the 169-year-old company.
Chris Bowen
Chris Bowen is ready to be treasurer, again. The western Sydney MP served for three months in the nation’s top economics post in the dying days of the Rudd-Gillard-Rudd government. After the party’s exile, Bowen has shaped Labor’s policy direction, with the blessing of Bill Shorten.
A fiscal conservative, Bowen will prioritise ending excessive tax breaks in a bid to build up a more resilient federal budget. Controversial policies, such as grandfathering negative gearing and scrapping excess franking credit refunds, have incensed many voters, but Bowen has pledged to hold his course. He will not be a tax-and-spend treasurer but rather will put extra tax revenue towards bigger buffers to stave off the next financial crisis.
In Bowen’s book, The Money Men: Australia’s Twelve Most Notable Treasurers, it’s no surprise that his favourite is Paul Keating, who is responsible for many of the country’s major deregulation initiatives.
The member for McMahon was elected first in 2004 and held early frontbench posts as opposition treasury spokesman and revenue and competition policy spokesman before the 2007 election, after which his roles were formalised. By 2009, Bowen was a cabinet minister as financial services minister and human services minister before becoming immigration minister.
Business should heed Labor’s focus on the offshoring of financial services jobs, ensuring regulators have tougher powers than the ones the Morrison government is trying to legislate, and expanding Future of Financial Advice reforms to other sectors of the financial industries.
Daniel Crennan
With the long-serving Peter Kell gone, Australian Securities & Investments Commission deputy chairman Daniel Crennan QC is the man in the hot seat when it comes to demonstrating the corporate regulator really has transformed itself into the “tough cop on the beat”, often promised but never (so far) delivered.
Crennan has been on the job since July and it is too early to tell whether the QC’s arrival has stiffened ASIC’s spine.
This is because the blood put in the water by the banking royal commission has flared the nostrils of ASIC’s enforcement staff, encouraging new aggression from officers who over the years have been held back by a culture of over-lawyering and the stultifying effect of funding cut after cut.
Crennan certainly knows his way around the bar table, and the perils and pitfalls of large-scale litigation. He was part of the team of barristers who appeared for the liquidators of Alan Bond’s failed Bell Group in epic litigation against a group of banks, including Westpac, CBA and NAB, that put their feet on the company’s assets just before its collapse.
Other tangles with the big end of town include representing Sarah Nowoweiski, ex-wife of retail magnate Solomon Lew’s son Steven, in an ugly 2012 dispute between members of the Lew family and their ex-partners over a $621m trust fund.
And in the early 2000s he represented disgraced former Carlton Football Club president and Liberal Party heavyweight John Elliott in Elliott’s failed attempt to overturn a four-year ban from corporate life over the collapse of Water Wheel Holdings.
It is good experience, but community expectations that corporate wrongdoers, most of whom have deep pockets and every reason to fight to the death, will finally start to feel the full force of the law mean 2019 is going to be a challenging year for Crennan.
Bruce Mathieson
Poker machines are a vexed issue at the best of times and tend to polarise opinion throughout the community.
Therefore, it is not surprising that billionaire Bruce Mathieson and Woolworths have not always seen eye to eye when it comes to their ALH pub and pokies joint venture. So much so that 2019 should be marked by a potentially acrimonious divorce between the two parties that could result in the biggest ASX float for some time.
ALH has been an outstanding financial success for both since being formed after Mathieson and then Woolworths boss Roger Corbett struck up a friendship in the hospitality tents of the 2000 Sydney Olympics.
Mathieson’s pub empire was combined with Woolworths into the venture, which now contains more than 300 pubs and venues around the country.
Though it is a mature sector, earnings keep growing under Mathieson and son Bruce Jr’s expert management. Yet Woolworths has long copped criticism from activists and shareholders about the pokies profits and seems to want out.
Having built his wealth from scratch and being something of a gambler himself (his investments also include technology ventures, property and the listed Mayne Pharma drug business), Mathieson is long used to the criticism.
But should plans for a decoupling in which Woolworths exits its 75 per cent stake and Mathieson maintains his 25 per cent share in a new listed vehicle come to fruition, he will be the face of one of the biggest deals of the year and he will have to convince investors of the merits of putting their money into a perennially controversial sector.
Jayne Hrdlicka
When Jayne Hrdlicka made a flying visit to Auckland last week for a function at the home of the a2 Milk Company’s inaugural chairman Cliff Cook, it was more than an event to mark her acceptance of the leadership baton from long-serving CEO Geoff Babidge.
In attendance were the five CEOs who have steered a2 Milk through the ups and downs of its 18-year life — including Babidge — as well as current and former New Zealand-based directors of the company and Ulrike McLachlan, widow of the man who discovered the A2 protein, Corrie McLachlan.
For Hrdlicka, the evening was an important opportunity to pay homage to the New Zealand heritage of the company and to celebrate the importance of its trans-Tasman legacy.
The year 2019 will be a crucial one in the career of the former Qantas executive and Woolworths director as she looks to take a2 into a new era of growth and stamps her authority on the company while respecting its strong New Zealand connections.
Despite the volatility in its share price since Hrdlicka formally took over in her role at the start of July, her first CEO job at a big listed company, a2 shares are still trading on a hefty price earnings multiple.
Investors are banking on a2 winning significant share in the high-growth markets of China and the US.
The former task should be helped by recent clarity around new cross-border e-commerce regulations, which have weighed upon a2 and other Australian companies selling food products into China.
Hrdlicka will also need to balance the workload of her role as president of Tennis Australia, the nation’s governing body for tennis.
Reporting by Joyce Moullakis, Michael Roddan, John Stensholt, Damon Kitney and Ben Butler
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