Ken Henry of NAB faces shareholder pressure

Hayne also expressed doubts about Henry's willingness to accept any criticism of how the NAB Board of Directors dealt with certain issues.

Disastrous performance

Several NAB shareholders said Henry aggravated his poor performance in the Royal Commission's panel of witnesses with Tuesday's official response to Hayne's critics. They said that "instead of showing the kind of contrition that he lacked during the investigation, Henry had indirectly told Hayne that he had completely deceived himself.

"In his final report, Commissioner Hayne stated that I did not seem inclined to accept the criticisms of how the Commission dealt with some of the issues raised by the committee, and I am disappointed that the Commissioner made that point. I know this is not the case, and I have thought hard about these and other issues, and as I said before, we take them very seriously.

"We have stated that we are not ready to accept good intentions when urgency, consistency and discipline are needed.The Board has conducted a thorough review of our culture, our governance and our responsibility. only bank to publicly publish our valuation, which clearly describes 26 areas on which we focus to be a better bank.

"Our number one priority for everyone at NAB is to put customers first, and at NAB we are committed to change, and we accept that we will ultimately be evaluated based on our actions."

A NAB shareholder, who did not want to be identified, said Hayne had appeared to challenge the bank's board with his comments on the suitability of Henry and Thorburn to be the leaders in NAB's response to misconduct dating back more than four years. years.

The message implicit in Hayne's criticism, said the shareholder, was that the new leadership was needed to ensure reform of NAB's culture, governance and accountability.

Another NAB shareholder said the bank 's board of directors should have met this week without Henry to review the Hayne report and discuss in particular criticisms of Henry and Thorburn.

But an NAB group said in a statement that the board had met with Henry present and unanimously supported the statement made on Tuesday.

Special intensity

Someone who has known Henry well for years said that it was enough to look at his record during the global financial crisis to know that it would bring a particular intensity and concentration to the job of repairing it. the broken culture of NAB.

As Secretary of the Treasury, he headed the Australian financial system ten years ago through a global liquidity crisis that could have easily plunged the country into a serious recession similar to that which hit the United States. United and Europe.

The response to the crisis has required unprecedented coordination between the government, regulators, the Reserve Bank and the private sector to ensure that cash flow is channeled to where it is needed. Most importantly, the Henry-led crisis team ensured that the big banks get wholesale financing abroad, which is the lifeblood of the financial system.

Australia has gone through the crisis with its banks in sound financial position and the prudential regulator, the Australian Prudential Regulation, have been applauded by its international peers.

Of course, the Hayne Inquiry has revealed in many bloody details involving thousands of poorly treated clients that a well-managed financial system does not boil down to strong capital ratios or exceptional financial risk management.

Through carefully selected case studies, Hayne detailed the potential violations by major banks, the MPA and various wealth management companies, both civil and criminal, over the last 10 years.

His badysis of the violations committed by several NAB entities involved in the field of retirement pensions and counseling revealed a deeply rooted profit motive that excluded the interests of clients. NAB has prioritized the interests of its financial advisors and divisional profit centers over those of its clients.

NAB has shown a certain arrogance towards its two regulators, APRA and ASIC, without serious consequences. Hayne reserved special criticisms for APRA and ASIC in the way they dealt with NAB misconduct.

Thorburn has been deeply involved in many of the violations reviewed by Hayne and has been criticized for faking misconduct as the product of failing processes and legacy computer systems.

Media Blitz

On Tuesday, Thorburn decided to save his job by canceling the planned long-term leave and commenting on his commitment to carry out a three-year transformation program.

He told Chanticleer that he did not agree with Hayne's badessment of his attitude to the cultural problems of NAB.

"I do not agree with that, I respect his point of view, but I think we have taken a lot of measures more broadly within the bank," he said.

He stated that he was determined to carry out the necessary changes to NAB's business model.

"It tells me that we have the right plan," he said. "I wanted to be an agent of change, I want to make a difference and I think I did, but if you want to be a leader who wants to create the future and not just survive, you have to make calls. bold … I'll continue to do it because it's necessary and that's what I am. "

Henry is one of the Treasury's elite officials to have moved into the private sector.

He followed in the footsteps of other senior Treasury officials who decided to advise prime ministers to take on powerful and highly lucrative positions in the financial services sector. David Morgan (Westpac), Ted Evans (Westpac) and John Fraser (AMP) are among others to be easily moved from Treasury to Finance.

The secretaries of the Treasury have never lacked confidence in themselves. They have sometimes been so powerful that the prime ministers have surrendered to their authority and avoided the necessary reforms.

If shareholders worry about NAB's leadership in the board room, this could force one or more directors to take a stand. The most experienced board director of the board is Phil Chronican, who has already been considered a candidate to replace David Morgan as CEO of Westpac.

It is possible that Henry and Thorburn could survive for many years as president and CEO of NAB, but they will have to bear the burden of being the only two outlier among the top four bank executives who appeared at the hearing.

TONY BOYD