By Colin Kruger
NAB has denied that chief executive Andrew Irvine is undergoing mentoring ahead of his first public appearance next week amid concerns raised by some of the bank’s investors about his behaviour and leadership style.
“There has not been a decision around fresh mentoring and development,” a spokeswoman told this masthead.
NAB chief executive Andrew Irvine has been in the spotlight this week.
Irvine, who has been on holiday in Canada, will appear at a single session at the Australian Banking Association (ABA) annual conference on Tuesday but will skip the gala dinner. It will be his first public outing since The Australian Financial Review revealed that major institutional investors had expressed concerns about Irvine.
At a lunch with investors in June, hosted by NAB chairman Phil Chronican, fund managers flagged concerns over Irvine’s leadership skills and drinking at company events.
That discussion between investors and directors followed a raft of senior executive departures just one year after Irvine was appointed chief executive.
According to The Australian Financial Review, the NAB board of directors held an impromptu meeting early this week before issuing a measured statement of support for Irvine. NAB has not denied any of the allegations.
NAB has played down Irvine’s non-attendance at the ABA dinner this coming Wednesday night, despite the fact he currently chairs the association. The bank said he never planned to attend the dinner.
Industry insiders, speaking on the condition of anonymity, said the bank’s board remains firmly behind Irvine but is taking the concerns of the investors seriously.
“Andrew Irvine and the NAB leadership team are delivering sound financial and operational results … the board’s support for Andrew and his team is unchanged,” a NAB spokeswoman added.
The vocal support of NAB’s board may not be enough to quell the disquiet from investors and analysts who have watched an exodus of key personnel – and a surprise appointment – at the $118 billion bank, which faces rising competitive pressure on its lucrative business lending division.
The executive Irvine appointed last year to run NAB’s business lending division, Rachel Slade, has been replaced by Irvine’s former Bank of Montreal colleague Andrew Auerbach. Slade left the bank this month.
NAB appointed Rachel Slade to lead the business banking division in April last year. She is one of the high-profile executives to depart the bank in recent times.Credit: Eamon Gallagher
The announcement that Auerbach – an outsider with no experience in Australia’s banking industry – had been appointed to such a crucial role was made in March.
The announcement also included the news that NAB’s highly regarded chief financial officer (CFO), Nathan Goonan, was defecting to rival Westpac. The CFO role at a major bank is the most important, aside from the chief executive, due to the crucial role it plays with investors and at significant financial announcements.
Analysts such as Brandan Sproules - who was with Citi at the time - openly questioned the impact of this managerial disruption in March, as NAB’s share price slipped right after the departures were announced.
“This [the decline in share price] was driven by the news that Nathan Goonan had defected to Westpac, and Anthony Irvine had made a ‘captain’s pick’ to bring in Andrew Auerbach from Canada to lead the business and private banking segment,” the Citi report said.
Sproules noted the market’s “cool reception to an outsider appointment to the business bank”, which “remains under high competitive pressure”.
Irvine replaced the highly respected Ross McEwan in April last year.
McEwan had helped to steady an embattled bank after NAB lost both its chief executive, Andrew Thorburn, and chairman, Ken Henry, in 2019 following blistering criticism from the banking royal commission.
Irvine ran NAB’s business lending division under McEwan before being promoted to CEO.
Chronican described Irvine’s leadership of the bank’s business lending division as “exceptional” in the conference call following his appointment last year.
“I know I have a big responsibility to continue to make things better every day, and I plan on doing just that over the next days, weeks and months as I move forward with a terrific leadership team,” Irvine said at the time of his appointment.
In May, NAB posted a 1 per cent jump in cash profit to $3.58 billion for the first half, with revenue for the period rising 1.7 per cent to $10.3 billion, helped by higher income from its markets trading divisions. The bank’s net interest margin (its funding costs compared with what it charges for loans) was flat.
While the results came in ahead of expectations, analysts have pointed out that NAB’s rivals are hot on its heels in the business lending segment, which attracts higher margins than mortgage lending. Irvine said in March that NAB was not only ready to defend its turf but also expand its footprint in the market.
“In a nutshell, everyone else wants what we have, and we’re not going to give it up without one hell of a fight,” he said.
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