Opinion
Why did ANZ look past its bench to pick a superstar CEO
Elizabeth Knight
Business columnistIt’s a fair guess that few in Australia have heard of Nuno Matos, but that’s about to change as the Portuguese executive is parachuted in to tackle one of the most important jobs in corporate Australia – running ANZ bank.
But did ANZ really need to fly in a star player to lead the team? What happened to its local bench strength? In the upper echelons of the corporate world, the hallmark of a well-run board is a well-executed succession plan, and that depends on developing a strong bench of internal candidates from which you pick a new chief executive.
The current heads of the Commonwealth Bank, National Australia Bank and Westpac were all plucked from their respective internal ranks.
Nuno Matos – a left-field choice to run ANZ.Credit: Bloomberg
So the appointment of former HSBC heavy hitter Matos is curious, at the very least, and potentially quite risky. That uncertainty was reflected in the immediate fall in ANZ’s share price after the announcement was made.
Matos is credited with having executive experience across a range of countries, which ANZ chairman Paul O’Sullivan said on Monday was important given the bank’s stronger international focus.
Taking the reins at ANZ won’t be a walk in the park for Matos.
But that said, ANZ, like its three main rivals, is overwhelmingly a domestic bank.
Understanding the idiosyncrasies of the Australian banking market, the political sensitivities and the regulatory landscape, are particularly important for any executive running one of the Big Four.
Taking the reins at ANZ won’t be a walk in the park for Matos. There is intense competition among the Big Four banks in Australia as they battle to hold or grow market share in mortgages and more recently in business banking. And next year, when interest rates begin to move down, the challenge of holding margins will only get trickier.
Despite O’Sullivan, the bank’s chairman, projecting an image of ANZ in tip-top shape and pregnant with possibility for improvement as it migrates customers to lower cost digital platforms and reaps the growth rewards from the acquisition of Suncorp Bank, there remains plenty of execution risk.
Mark Whelan, head of ANZ’s institutional bank, was a strong internal contender for the CEO job. Credit: Luis Enrique Ascui
O’Sullivan declared on Monday that the bank is in fine fettle, but he glossed over the government bond trading scandal that the bank has been embroiled in. The scandal led to the financial regulator imposing a requirement from ANZ to hold additional risk capital.
Meanwhile, the Australian Securities and Investments Commission is investigating the bank for allegedly manipulating the benchmark 10-year futures rate when it was appointed a manager for the $14 billion government bond sale last year.
Separately, ANZ is looking into the reporting of incorrect data to the Australian Office of Financial Management, which manages the government’s debts. And, the bank has engaged a law firm to investigate workplace culture in the team. The Australian Financial Review reported that drinking during office hours and drug use among senior staff was tolerated on the trading floor.
This mess is the reason that many financial services experts and analysts believe the more obvious internal contender, the head of ANZ’s institutional bank – Mark Whelan – missed out on elevation to the top job.
Just how long Whelan now sticks around at ANZ will be a question for investors, but it’s unlikely he will be with the bank in the long term.
There were a couple of other internal candidates in the mix for the CEO job, but in the end, ANZ’s board seized the opportunity to grab Matos, who had become available after he missed out on the top job at the more global bank HSBC.
It certainly appears that Matos was keen to take a tilt at running a major bank; speculation put him in the mix of contenders for the role of chief executive at Westpac – a job that eventually went to Anthony Miller, who had run the business bank.
Rather than suggest any radical change is in store under Matos’ leadership, O’Sullivan was at pains to point out on Monday that the current strategy for ANZ will remain on course.
But given Matos is an unknown quantity in Australia, the jury is out on that.
Matos could just be the right tonic to lift ANZ’s share price game, given the discount at which it trades relative to its competitors. But that will come down to how effectively he translates his immense pedigree into tangible results.
The Suncorp integration could get messy, and there is the task of making ANZ Plus, the bank’s new digital banking platform, the premier portal for its customers.
So, there’s a lot for Matos to sink his teeth into. He will be on training wheels for some time, however, and won’t get his feet under the desk officially until July.
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