‘Lost a lot of respect and trust’: New NAB chief’s plan to rebuild bank’s reputation
National Australia Bank’s new chief executive Ross McEwan says the bank must focus on getting the basics right and removing complexity from its operations, conceding it has lost “a lot of trust and respect” in recent years.
In his first detailed public comments since formally starting as chief executive earlier this month, Mr McEwan reiterated on Wednesday that the bank would have its work cut out in rebuilding its standing, after a tumultuous period. Former chief Andrew Thorburn and former chairman Ken Henry both resigned this year after harsh criticism in the banking royal commission.
Addressing about 200 shareholders at the bank’s annual meeting in Sydney, Mr McEwan acknowledged there had been “unacceptable” failings at the bank.
“On the barometer of reputation, in recent years, including through the royal commission, it is clear NAB has lost a lot of trust and respect.
“We haven’t always done what we said we would and this is unacceptable. I’m under no illusion about the challenges before us.
“Where we stand today isn’t where we want to be; on customer experience, on employee engagement, on relative return on equity, and on productivity and efficiency,” Mr McEwan said in his opening address.
Complexity creates problems for our customers and colleagues, and we still have too much of this complexity inside the bankNAB chief Ross McEwan
Mr McEwan, a former Royal Bank of Scotland CEO who was recruited after the dramatic resignation of Mr Thorburn, outlined five focus areas for the bank. These were to get the simple things right for customers; to ensure the bank’s strength; to make NAB “a good place to work”; to make it easy for customers to do business with the bank; and to grow.
“It starts and ends by getting the basics right and delivering consistently and reliably,” he said.
Speaking on what he would like the bank to look like in five to 10 years, Mr McEwan this “vision” would require the bank to become simpler.
“Complexity creates problems for our customers and colleagues, and we still have too much of this complexity inside the bank,” he said.
Mr McEwan acknowledged a recent lawsuit lodged by the Australian Securities and Investments Commission, which on Tuesday alleged the bank had broken the law more than 12,000 times by charging fees for no service in its advice arm. “As we said, we take this action seriously and will continue to work co-operatively with ASIC to deal with this issue,” he said.
With bank profit margins under pressure, and digital competitors circling the big four, some investors are keen to see Mr McEwan accelerate a cost-cutting program.
In a nod to the shifts in customer expectations that have occurred amid the digital revolution, Mr McEwan said how customers expected service from banks was “changing dramatically.”
“Australians and New Zealanders don’t want to be on hold for ten minutes in a call queue or wait weeks to be approved for a mortgage or business loan. This is a real-time world. If we are too complicated and too slow, they will not wait for us. They will go somewhere else,” he said.
NAB chairman Phil Chronican acknowledged in his opening address that NAB had faced a “very challenging” year, and that the bank’s share price performance in recent years had been “disappointing.”
NAB last year copped a record backlash on executive pay, and Mr Chronican said the board understood “that we got executive remuneration wrong last year.” In response it has overhauled its pay model and it did not pay short-term bonuses to top executives this year.
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