“There is very little about the strategy I want to refine but there’s a lot of about the execution and the way it operates that could do with a lot of sharpening up.”
“We did a self assessment against the APRA CBA report and we identified a whole bunch of areas where need to be more rigorous, operate a higher tempo and putting customers higher up the agenda.”
“There was a sense we didn’t always execute or were as disciplined as we could have been.”
CLSA analyst Brian Johnson has been analysing the bank since 1987 and supported the appointment.
“Phil Chronican knows what needs to be done. He understands shareholder value and he knows how they fit together. That’s quite a development,” Mr Johnson said.
Certainty for the market
Mr Chronican was appointed acting chief executive on March 1 and initially dismissed suggestions he was a candidate for the role of chairman.
During the call to announce the surprise resignations and Mr Chronican’s temporary role, the bank said it would look to replace the chief executive first.
The bank was criticised for the approach that would allow outgoing chairman Dr Henry to have a role in the selection process. Future Fund and Nine Entertainment chairman Peter Costello said Mr Henry should not be involved.
The bank responded by establishing two committees to manage the respective processes; NAB’s non-executive director and chairman of the audit committee David Armstrong led the chairman selection and non-executive director Ann Sherry is leading a global search for CEO.
Mr Armstrong thanked Dr Henry for his service and said that Mr Chronican will provide certainty for the market and expedite the appointment of the CEO.
“Phil has been an outstanding Director for NAB and has a deep, extensive background in Australian financial services. Phil told the Board that he did not intend to be considered as a candidate for the CEO role, enabling us to move quickly to appoint him as Chairman,” Mr Armstrong said.
The elevation of Mr Chronican will put him in the driving seat to oversee the board’s selection of the new CEO, the most important decision NAB’s directors have made in decades.
NAB has been poorly served by a string of CEOs that have failed to deliver into expectations, including Mr Thorburn’s predecessor Cameron Clyne; Frank Cicutto, who resigned in the wake of a currency trading scandal in 2004; and John Stewart, who was brought in to clean up that mess but left abruptly in 2008 after a massive write-off.
Although there are strong internal candidates in the wings in Anthony Healy, head of the business bank, and former NSW premier Mike Baird, now head of the consumer bank, it is widely thought that Mr Chronican will look outside NAB’s ranks given the extent of the cultural failings identified by the royal commission.
Mr Chronican said: “”The next CEO needs to be somebody who understands what the industry has been through with the royal commission and can see their way to running a bank with the interest of its customers and deliver long term sustainable returns.”