George Frazis exits as BoQ’s strategic priorities change

The bank’s shares tumble as the chief executive who took the top job in September 2019 — and had been implementing a turnaround plan — exits.

Bank of Queensland chief executive George Frazis is parting ways with the regional lender, amid the board’s plan to change the bank’s strategic priorities.

The bank’s board confirmed the change on Monday after The Australian revealed the CEO exit and that BoQ chairman Patrick Allaway was poised to take over on an interim basis.

In an ASX statement, the Brisbane-based bank said it was “commencing a domestic and international executive search” for a new CEO and that Mr Frazis was leaving, effective Monday.

Mr Allaway becomes executive chairman while the executive search occurs, while BoQ non-executive director Karen Penrose will be the lead independent director during the period.

BoQ’s shares tumbled 6.6 per cent to $7.06 in early Monday trading, on news of Mr Frazis’s departure. Sources said the bank didn’t believe there was a need to issue an operational update alongside the CEO change.

In the statement, Mr Allaway said Mr Frazis had overseen a return to “growth in all key channels across the bank, the successful acquisition and integration of ME Bank, as well as achieving strong progress in the bank’s technology transformation”.

“However, the board has formed a view that different leadership is now required to ensure BoQ can continue to build a stronger and more resilient bank through future cycles. We thank George for his significant contribution to BoQ over the past three years,” he added.

Under the exit terms of his contract, Mr Frazis will receive a payment of about $1.13m.

Mr Frazis joined BoQ in the top job in September 2019 – from Westpac – and had been implementing a turnaround plan at the bank, which included overhauling and replacing legacy technology systems. He also steered the acquisition of ME Bank, which completed last year, and was seeking to revive BoQ’s growth.

George Frazis at The Courier-Mail Future Brisbane lunch at Royal International Convention Centre in Bowen Hills. Picture: Richard Walker

Mr Frazis’s tenure had, though, been marred by high turnover among his executive ranks.

Even so, the bank’s annual report showed he received 88 per cent of his total available performance shares for 2022 and 58 per cent of its available award options. Mr Frazis’s total statutory reported pay was $2.8m for 2022, up from $2.3m in the prior year.

Mr Allaway outlined BoQ’s priorities would include strengthening the bank, including asset quality, as the economic cycle becomes more challenging and boosting risk management practices.

“We will continue to work with regulators in advancing maturity in risk behaviours and architecture to strengthen its management framework and practices, including BoQ’s control environment in respect of non-financial risk,” the statement said. It also said BoQ would have a “sharpened focus” on simplification, productivity, execution and optimising returns.

Board sources and those with knowledge of the situation said differences in management style, approach and ideas around the next stage of the bank’s transformation had contributed to his exit from the bank. Mr Frazis is likely to be available to consult to BoQ and the executive team as required.

The executive departures over the past 18 months have included BoQ chief financial officer and chief operating officer Ewen Stafford. He announced his exit in April after just 2½ years at the regional lender.

Other departures from the executive team included former chief customer officer Danielle Keighery and head of business banking, ­Fiamma Morton, who departed in September 2021.

BoQ’s digital transformation, including new banking apps, was a key part of Mr Frazis’s pitch to modernise the bank.

On Monday BoQ said its focus on technology upgrades would remain as it continued to build a cloud-based digital and data-led bank, including a changeover from multiple and complex legacy systems.

The bank, like its counterparts in the sector, has been seeking to ramp up its risk management systems and procedures following the fallout from the Hayne royal commission.

BoQ’s shares rallied strongly after the bank’s last earnings result and its net interest margins benefited from higher official interest rates, given the Reserve Bank’s aggressive tightening cycle since May. The stock closed at $7.56 on Friday, which is above the $7.35 per share price BoQ raised capital at early in 2021 to help fund the ME acquisition.

The bank’s annual cash earnings fell 5 per cent to $508m, from a proforma result in 2021.

When BoQ announced its purchase of ME they were quick to highlight both lenders used a Temenos core banking platform, albeit the latter an older version. At the time, Mr Frazis said that would see the migration of systems and data happen in a “a lot simpler” fashion.

BoQ elbowed aside other bidders to buy ME, including ANZ, as it sought to bulk up across retail and digital banking.

Before joining BoQ, Mr Frazis led Westpac’s consumer bank and prior to that had stints running St George, and Westpac’s New Zealand unit.

George Frazis, Managing Director and CEO of BOQ. Picture Nick Cubbin

Originally published as George Frazis exits as BoQ’s strategic priorities change