Call me simple, but I could never figure out why the Commonwealth Bank of Australia, which is an almost entirely domestic bank, had a chairman based in London, for part of his tenure at least.
Yet David Turner sat on the CommBank board from 2006 to 2016 and was chairman from 2010. Apart from the fact he was an absentee supervisor of the managing director and other senior executives, his views reeked of witlessness and hubris.
On his retirement, he noted the “bank is now attuned to what everybody expects, what our customers expect, what our shareholders expect and what society expects”. Was this a joke?
For good measure, he suggested bank-bashing in Australia was the equivalent of Donald Trump and Brexit — I guess he meant that dumb people voted for Trump and Brexit — and the bank’s shareholders’ objections to soft targets being included as part of CommBank’s obscenely generous executive remuneration packages were ill-considered.
To reinforce that CommBank really doesn’t get it, the annual report in which his retirement was noted remarked that “his tenure was marked by decisive leadership, but also compassion and humility. His commitment to long-term investment and passion for driving diversity continues to stand us in good stead.”
I’m sure I’m not alone when I say to Turner: good riddance.
The critical issue now is what was the board of CommBank thinking when it appointed an internal candidate to replace the shopsoiled managing director, Ian Narev? How can an internal candidate be relied on to fix the cultural problems of the bank? The short answer is: he cannot.
Note also that Narev received $12.3 million in remuneration in 2015-16 based on an outsized bonus. Sadly, for him, his total remuneration in 2016-17 was mere $5.5m. It must have been a struggle for him, but let’s face it, these figures are just over the top.
And it beggars belief two CommBank directors are based overseas; the chairman of the critical risk committee lives in Singapore.
At a more general level, what the royal commission is revealing is a deep malaise — venality, in fact — in the boards of all the big banks. While the board is responsible for management of these banks which, by definition, should involve putting customers first, too many current directors insists on the pursuit of extraneous social causes — think same-sex marriage, gender equality, diversity, climate change — while still collecting fat pay cheques.
The egregious behaviour of the banks, particularly their financial planning divisions, is also putting paid to the notion that having more women on boards guarantees ethical and responsible outcomes for customers, or superior financial performance. All the banks have had solid numbers of female directors for some time. All the banks have been deemed an employer of choice by the Workplace Gender Equality Agency. No doubt, senior HR staff in the banks bow to the altar of the WGEA: at least its reporting requirements keep them busy.
Clearly, there is a directors’ club in Australia where members essentially appoint each other to interlocking, influential, well-paid positions. If this were the animal kingdom, it would be called inbreeding.
Being one of David Gonski’s angels has also helped launch and sustain the careers of quite a few female directors, some from positions of relative inexperience.
All chairmen of the big banks should seriously consider their positions when the commission wraps up. There is a strong argument for all to follow AMP’s Catherine Brenner along the plank.
What is needed is a group of directors, many with direct experience in banking, but importantly with the strength of character to stand up to the onslaught of political correctness.
They can then focus on running customer-focused, efficient banks. Members of the club need not apply.
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