Thorburn Quits as National Australia Bank CEO After Inquiry Lashing
(Bloomberg) -- National Australia Bank Ltd.’s chief executive officer and chairman both resigned Thursday, becoming the highest-profile casualties of a sweeping inquiry into misconduct in the country’s financial industry.
Andrew Thorburn, 53, and Chairman Ken Henry, 61, announced their departures just days after being the target of withering criticism in the Royal Commission’s final report, which questioned whether they were capable of leading the lender’s response to a string of scandals.
The yearlong inquiry uncovered a litany of wrongdoing across the industry, from charging dead people fees to advisers pushing customers into bad investments to meet bonus targets. National Australia staff accepted cash bribes to approve fraudulent mortgages and misled the regulator over a fees-for-no-service scandal.
“I acknowledge that the bank has sustained damage as a result of its past practices and comments in the Royal Commission’s final report,” said Thorburn, who will leave Feb. 28. “I recognize there is a desire for change.”
His replacement will have to restore customer trust in the lender and steer it through a tougher landscape of falling earnings, a sinking housing market and rising funding and compliance costs. The nation’s big-four banks also face more muscular regulators intent on punishing wrongdoers in court.
In further fallout from the inquiry, National Australia said it will delay the planned IPO of its MLC wealth management unit as fee income and commissions come under pressure.
Banking veteran Philip Chronican, who joined National Australia’s board since May 2016, was named acting CEO while a global search for a replacement is held. Internal candidates will also be considered, the bank said in a statement.
One of the leading internal candidates is Mike Baird, the former premier of New South Wales, the nation’s most-populous state, who now runs National Australia’s retail bank.
After leaving politics in early 2017, Baird rejoined National Australia, where he started his banking career in 1989. He held senior roles in institutional banking in Australia and London, and also worked at Deutsche Bank AG and HSBC Holdings Plc.
In his final report released Monday, Commissioner Kenneth Hayne berated Thorburn and Henry for their performance in the witness box and questioned whether National Australia is “willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do.”
“Having heard from both, I am not as confident as I would wish to be that the lessons of the past have been learned,’’ he wrote.
Thorburn was the longest serving of Australia’s big-four bank CEOs, having taken the top job in August 2014 after running the lender’s New Zealand unit for six years.
Henry has served as chairman since December 2015, having joined the bank’s board in 2011. Before that, he was the nation’s top finance bureaucrat, and was one of the main architects of the stimulus package that helped Australia dodge a recession during the global financial crisis.
Hayne excoriated Henry’s testimony, saying he “seemed unwilling to accept any criticism of how the board had dealt with some issues.”
Henry, who will leave once a permanent CEO is appointed, said his departure will help lead to a renewal of the board.
“This is naturally a difficult decision but I believe the board should have the opportunity to appoint a new chair for the next period as NAB seeks to reset its culture,” he said in the statement.
Thorburn isn’t the first National Australia CEO to be undone by scandal. In 2004, Frank Cicutto stepped down after a foreign currency-trading scandal cost the bank A$360 million.
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