National Australia Names Former RBS Chief as New CEO
National Australia Names Former RBS Chief as New CEO
(Bloomberg) -- Ross McEwan, who engineered Royal Bank of Scotland Group Plc’s revival, is now taking on another turnaround job after being appointed chief executive officer of scandal-plagued National Australia Bank Ltd.
During his time at RBS, which was nationalized in the wake of the global financial crisis and beset by a multitude of scandals, the bank returned to profit and dividend payments in what Chairman Howard Davies described as “one of the biggest U.K. corporate turnarounds in history.” McEwan, 62, was appointed head of its U.K. retail division in 2012 before becoming CEO the following year.
Now, he takes over an Australian lender reeling from its own bad behavior. The recent inquiry into misconduct in the country’s financial industry heard National Australia employees accepted cash bribes to approve fraudulent mortgages, charged fees for services it didn’t provide, and downplayed the extent of the wrongdoing to regulators. McEwan’s predecessor, Andrew Thorburn, resigned in February after his leadership was sharply criticized by the inquiry.
“It does take a long time to repair the reputation of an institution such as this,” McEwan told reporters in Melbourne after his appointment was announced Friday. “There’s no silver bullet.”
He has firsthand experience. RBS endured a decade of losses and was mired in several of the scandals that ensnared banks after the financial crisis -- including mis-sold payment-protection insurance, Libor and foreign-exchange index rigging and the packaging and sale of the mortgage-backed securities that fueled the 2008 meltdown. RBS, nationalized after the disastrous takeover of ABN Amro, also had to restructure its investment bank, once one of the world’s largest.
McEwan rejected suggestions that National Australia was a “broken bank,” adding that he believes he can lead it to recovery.
“One of the things that does attract me to NAB is probably a similar reason I went to RBS,” he said. “There’s many challenges here I think I can be very helpful to get the bank through.”
His appointment was welcomed by investors, with National Australia shares rising 2.2% as of 4 p.m. in Sydney trading. Before joining RBS, the New Zealand-born McEwan worked at Commonwealth Bank of Australia, where he headed its retail bank for five years.
“His background and his track record at both CBA and RBS add a lot,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney.
“At CBA he delivered very strong retail banking performance, he had a really strong focus on customer service and product simplification, and he had really good margin and volume management,” she said. “These are the things that NAB is probably lacking and to me that looks pretty good.”
McEwan previously announced his intention to leave RBS before April 2020. The Edinburgh-based bank congratulated him on his new role Friday, saying the search for his replacement continued and that he would remain in place until a successor is named. Alison Rose has been seen as McEwan’s potential replacement after her elevation to deputy CEO last year.
Shares in RBS have fallen about 36% since McEwan took charge in October 2013, with the post-bailout government shareholding and economic headwinds in the U.K. weighing on the stock.
As well as restoring trust in National Australia Bank, McEwan also faces a tough operating environment as the nation’s leading banks grapple with slowing profit growth, shrinking margins and a mounting compensation bill for wronged customers. National Australia in May slashed its dividend payout 16% after its remediation bill topped A$1.1 billion ($778 million).
“Ross is the ideal leader for NAB as we seek to transform our operations and culture firmly around leading customer service, experience and products,” acting CEO Phil Chronican said in the statement. “Ross brings a track record of delivering important and practical improvements for customers. RBS has been through many of the same challenges which NAB now faces around culture, trust and reputation.”
The largest four banks are also under fire for failing to pass on all of the central bank’s cut in official interest rates to home borrowers as they seek to protect interest margins.
“Banks in general have a lot of challenges, and they’re not necessarily NAB-specific,” said Daniel Mueller, a portfolio manager at Vertium Asset Management. “It’s a tough industry at the moment.”
Thorburn had been the longest serving of Australia’s big-four bank CEOs before he resigned. Matt Comyn took the top job at Commonwealth Bank in April 2018 in the wake of a money-laundering scandal, while Shayne Elliott has been at the helm of Australia & New Zealand Banking Group Ltd. since January 2016. Westpac Banking Corp.’s Brian Hartzer has been in place since February 2015.
McEwan will be paid a base salary of A$2.5 million a year, and be eligible for as much as A$7 million in short- and long-term bonuses paid in cash and stock.
--With assistance from Sybilla Gross.
To contact the reporter on this story: Peter Vercoe in Sydney at pvercoe@bloomberg.net
To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Marion Dakers, Keith Campbell
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