Plato Investment’s Don Hamson, who holds 5 million NAB shares worth $125 million, said the bank must appoint an outsider if it wanted to clear the slate.
“I think they need a clean brush through the place,” he said. “This has been ongoing for years at NAB and I am not sure they have fully learnt the lessons.”
As the bank congratulates itself on a deep bench of talent, other names are emerging as potential candidates including the Australian CEO of British private bank Coutts, Peter Flavel; Medibank CEO Craig Drummond; Westpac’s retail boss George Frazis; and Royal Bank of Scotland CEO Ross McEwan.
The oneNAB strategy
The oneNAB strategy devised by Mr Thorburn notched up some early wins as he delivered on promises to extricate the bank from offshore misadventures, such as Clydesdale Bank in the UK and Great Western Bank in the US. Mr Thorburn’s attentions then returned to the bank’s domestic operations.
The revised or accelerated oneNAB strategy announced in November 2017 saw the bank embrace modern management techniques, sack 6000 workers, and spend $1 billion replacing functioning systems with new technology.
Investors have not been swayed by buzzwords and the share price remains 25 per cent lower than when the revised oneNAB strategy was announced.
The simultaneous resignations of the CEO and chairman were supported by analysts including CLSA’s Brian Johnson and UBS’s Jon Mott who believe the double whammy will allow a new team clear air.
Investors were more cautious and NAB shares sold off by 18¢ or 0.7 per cent to $24.75 as the market wrestled with the prospect of another internal candidate, with head of consumer banking Mike Baird and head of business banking Anthony Healy among the chances.
Loyal shareholders at NAB have had to endure more than shareholders at any of the banks with shares down 25 per cent since November 2017 compared with Westpac’s 19 per cent fall, ANZ’s 10 per cent fall and CBA’s 4 per cent fall.
Embarrassing corporate narrative
In addition to wearing bigger losses, investors have also had to deal with the embarrassing corporate narrative, which has at times resembled a travelling side show complete with fraudsters, the milking of dead customers, cute word games with the regulator, and potentially criminal acts.
NAB scored an own goal even before the bodies began piling up at the royal commission when an alleged fraud was revealed to be taking place in the office of the CEO (OCEO), right under Mr Thorburn’s nose.
In April 2018, NSW Police conducted raids conducted over three Sydney premises as it investigated corrupt commissions paid to a bank employee who authorised inflated payments.
The Melbourne home of former NAB employee and Mr Thorburn’s chief of staff Rosemary Rogers would be raided one year later. She would have her assets frozen including four properties, a luxury car and two boats.
Board papers reveal “normal financial controls” were not present in the OCEO but the bank says they have since been strengthened.
NAB emerged as the first bank to be in the crosshairs of the royal commission when senior counsel assisting Rowena Orr exposed the lender for operating a shoddy home loan referral scheme known as the introducer program.
The program was being exploited by tailors, gym owners and a group of corrupt bank employees operating out of Western Sydney bank branches. The bank says it has enhanced its controls here, too, but the program is still responsible for one in every 20 loans sold.
The rip offs and scandals at NAB seemed endless in calendar 2018. From Ferrari-driving mobile brokers to dead customers being charged for financial advice, bad behaviour was everywhere you looked.
BKI Investments portfolio manager Tom Millner, who owns 2 million shares worth $50 million, is among those hoping the bank casts a wide net with its next appointment.
“It would be a wise move for the board to look externally for their next CEO appointment. Even if the appointment was for three years, an outsider couldn’t hurt at this point,” Mr Millner said.