Kenneth Hayne brutally sealed NAB’s Ken Henry, Andrew Thorburn’s fate

In this charged environment, it was a matter of if, and not when, Henry and Thorburn would go.

The double departure is a sign of the urgency here. Thorburn will go at the end of February, replaced by former ANZ executive Phil Chronican in an acting capacity. Henry will stay until a permanent CEO is in place.

Henry, whose evidence at the royal commission was jarring and at times tone deaf,did himself no favours this week when he disagreed with Hayne’s characterisation of his time in the box.

On Thursday though, he acknowledged NAB couldn’t move forward with him at the top.

“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 and ensure all decisions are made on behalf of customers,” he said.

Thorburn is surely the most unlikely figure to fall from this commission.

An earnest and sincere career banker, he has built a public persona as an open and candid leader, driven by his strong faith and a deep desire to lead from the front.

But Thorburn’s honesty has cost him in the end.

Truthful answer

Thorburn clearly gave what he believed was a truthful answer when he insisted to Hayne that NAB’s fee-for-no-service scandal was a systems error, sloppy rather than malicious.

But this viewappears to have enraged the Commissioner. Justifiably, Hayne struggled to come to grips with the idea that a business as big as NAB, which had started charging these fees in 2008 or 2009 and discovered them in 2014, could simply make an error of this magnitude.

“I 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 by NAB and NULIS on this account is likely to be more than $100 million,” Hayne said.

But Hayne’s characterisation of NAB as the worst of the worst is arguably unfair.

NAB’s handling of its fee-for-no-service scandal was poor, and the length of time it took to remediate customers was appalling. That this remediation was delayed by NAB executives – Thorburn’s direct reports, in fact – battling the corporate regulator was a terrible mistake,as Thorburn said this week.

But was NAB’s conduct worse than that of AMP, which says it will refund just under $400 million to customers for charging fees for no service?

Or did NAB’s top executives simply not strike the right note of contrition in the witness box that Hayne was looking for?

And while Hayne may shoot down the suggestion that the fee-for-no-service scandal was caused by carelessness, it’s worth noting that Thorburn’s view was shared by Australian Prudential Regulation Authority chairman Wayne Byres, who said that “in many cases the fees-for-no-service issue was in large part a product of poor IT infrastructure … [and] legacy system issues.”

Thorburn and Byres both might be wrong, of course, but whether Hayne should have hung Thorburn out to dry so brutally is at least a live question.

What’s particularly ironic about Thorburn’s departure is that he was perhaps the bank executive to best publicly articulate what went wrong in the sector.

Speaking for aBosscover story in the middle of 2018, Thorburn explained that as he looked back over his career as a banker he could see the slow drift away from customers and towards profits, driven by pay incentives that put the focus on sales and short-term growth.

“As an industry we have drifted, we’ve lost touch, and that’s not good enough,” hetold us at the time. “I’ve been a banker my whole career, and I’m proud to be a banker. But I’m ashamed of some of what we have heard during the royal commission, including issues at our own bank. It’s unacceptable. It’s not what banking is about and we must, and will, change.”

It’s hard to reconcile that view with Hayne’s declaration that Thorburn had failed to heed the lessons of the past.

Thorburncalled for banks to return to a five-to-10-year horizon.Beneath the royal commission firestorm, his strategic push was to simplify the bank, investing $1.5 billion over three years to simplify NAB’s systems, processes and products, boost its market share in business banking, rebuild its technology platforms and slash costs, including about 6000 jobs.

Like any plan that requires investment, Thorburn had his doubters. But until this week he remained convinced the plan was working, and said the royal commission had given it extra urgency.

“You could argue that these changes are more necessary than ever,” he told Chanticleer on Tuesday.

But not as necessary as change at the top.

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