National Australia Bank’s chair Ken Henry and chief executive Andrew Thorburn have fallen on their swords in the wake of Kenneth Hayne’s final report on his royal commission on financial services which was delivered on Monday.
Thorburn, who used to be chief executive of NAB’s New Zealand subsidiary, Bank of New Zealand, will leave on Feb. 28 while Henry will depart once Thorburn’s successor has been appointed.
The board has asked Dunedin-born NAB director Philip Chronican, who has extensive Australian banking experience including 35 years at ANZ Bank and at Westpac before that, to serve as acting chief executive from March 1 until it appoints a permanent replacement.
Hayne’s report railed against institutions’ “unwillingness to recognise and accept responsibility for misconduct” and against the way they dragged their heels in responding to misconduct and to compensate affected customers.
He singled out NAB for particular criticism, saying that it “stands apart from the other three major banks” and that, after hearing from Henry and Thorburn, “I am not as confident as I would wish to be that the lessons of the past have been learned.”
Hayne “thought it telling that Mr Thorburn treated all issues of fees for no service as nothing more than carelessness combined with system deficiencies when the total amount to be repaid … is likely to be more than A$100 million.”
He also thought it telling “that in the very week that NAB’s chief executive and chair were to give evidence before the commission, one of its staff should be emailing bankers urging them to sell at least five mortgages each before Christmas.”
In the announcement of the pair’s resignations late yesterday, Thorburn said: “It has been an honour to be the CEO of NAB and to have been part of NAB since 2005.”
Thorburn started as NAB’s chief executive on Aug. 1, 2014 after serving nearly six years as BNZ’s chief executive. BNZ had decided in 2003, before Thorburn’s appointment, to cease dealing with mortgage brokers but Thorburn was an enthusiastic promoter of this, suggesting it made BNZ’s mortgages cheaper.
In 2003, only about 5 percent of BNZ’s mortgages were written by mortgage brokers compared with an estimated overall 25 percent market share for brokers.
That decision was reversed in 2015 and, by September last year, mortgage brokers accounted for more than 15 percent of BNZ’s mortgage book – brokers are now estimated to have north of 40 percent overall market share now.
Thorburn had been on holiday until just before Hayne’s report landed and he cancelled plans earlier this week for another two months holiday
Thorburn said yesterday that he had a number of conversations with Henry this week.
“I acknowledge that the bank has sustained damage as a result of its past practices and comments in the royal commission’s final report,” he said.
“As CEO, I understand accountability. I have always sought to act in the best interests of the bank and customers and I know that I have always acted with integrity. However, I recognise there is a desire for change.”
Henry said the board recognised that change was necessary and the timing of his departure “will minimise disruption for customers, employees and shareholders.”
The Australian media are already saying that Henry should not be choosing Thorburn’s successor. The Australian Financial Review’s Chanticleer column says that Henry “does not have the moral authority to lead the process of choosing a new CEO.”
The AFR also reports that in August 2017, Henry had said the day would come when he would have to throw Thorburn under a bus but he would never have expected he, Henry, would be run over at the same time.