Shayne Elliott's legacy after ASX: ANZ scandals as new CEO Nuno Matos takes over
ANZ chief executive Shayne Elliott delivers half year results in Melbourne on Thursday. Picture: Arsineh Houspian.
Elliott has certainly left a cleaner bank and importantly a far less risky one that delivers fewer financial shocks, but Australia's perennial number four bank is still a long way from meeting its potential.
Former HSBC top executive and Santander banker Nuno Matos takes charge on Monday. It's by no means a broken business, however, where Elliot has unfinished work getting ANZ into shape, Matos' mandate will be all about execution.
When he took charge at the start of 2016, Elliott set himself four strategic priorities: creating a simpler bank; focusing ANZ on businesses where it can win; driving a cultural transformation; and building a digital platform to get the bank's aging technology in shape.
Elliott, the former institutional banker, moved quickly on the first two. He sold 30 businesses, mostly across Asia, and exited ANZ's problematic wealth management operations.
In doing so, he raised about $8bn for shareholders. This started the journey of ANZ becoming a transaction led bank in Asia, processing currency flows. Importantly, it ripped risk out of ANZ's accident-prone balance sheet.
'The one that I wouldn't give myself a perfect score on was the digitisation of the business. I think we've made progress. I think in hindsight, what I was a bit naive about was how hard that would be,' Elliott tells The Australian.
ANZ is today a lower risk bank than the one Shayne Elliott inherited. Picture:Getty Images
He is talking about the massive rebuild of ANZ's tech network, a project that has cost billions and was years late.
Only now Elliott's ANZ-Plus project is being switched on with nearly a million retail banking customers and all their banking data gradually being moved onto the new cloud-based platform. So the benefits of having a lower cost to serve is yet to be seen. A digital platform for business customers has also being built and is also being rolled out.
Elliott says 'life got in the way' for ANZ with events like the 2018 banking royal commission and Covid pandemic which each caused major distraction for the bank.
'I'm not making excuses, but I'm just saying if you'd asked me in 2016 where I would hope to be in 2025 we would have hoped to be further down that track. Some of it's environmental and some of it is just a lot harder than it looks'.
Elliot was speaking as ANZ posted a March half cash profit of $3.57bn, flat on the same time last year. The result was struck on record revenue and boosted by the first-time contribution of regional lender Suncorp bank, acquired by Elliott for $4.9bn. Stripping that contribution out, the headline result would have gone slightly backwards. The bank is generating record revenue and credit losses remain grounded near historic lows despite the interest rates hitting a cyclical high.
ANZ trading scandal
There's no doubt Elliott's legacy has been tarnished by the past year, when a bond scandal in his Sydney dealing room has attracted the attention of regulators. Several traders have since been sacked for behaviour issues, while market regulator ASIC has an investigation underway into more serious allegations of pricing manipulation in Australian government bond issues. ANZ has investigated the claims forensically and is expected to defend its position. However, it is waiting until ASIC finalises its investigation, expected next month.
The bank regulator APRA has now told ANZ to set aside $1bn in additional capital for now due to concerns about persistent risk governance and culture. This is more than any other bank, and would be funds otherwise that could be converted into loans.
A separate review into culture has made, and chairman Paul O'Sullivan has taken charge of non-financial risk.
Incoming ANZ CEO Nuno Matos (right) with chairman Paul O'Sullivan. Picture: Aaron Francis
Elliot says where ANZ has turned financial risk management into a strength, moving from a position of having the highest provisions and volatile credit exposures to the lowest there is work on non-financial risks. 'I'm also confident in the team's ability to get on top of that (non-financial risk) pretty quickly,' he says.
ANZ v Westpac, CBA
In many ways, the lack of acute regulatory shocks over the past decade has worked against ANZ. Both Commonwealth Bank and Westpac were shaken to the core by their respective hits from financial crimes regulator Austrac and forced to get their cultural houses in order. Then National Australia Bank went through the fire when its top management and board was singled out for criticism coming out of the Hayne financial commission.
By comparison, ANZ sailed through, allowing a degree of complacency to set in around non-financial risks. ANZ's federated structure of managing risk at a business level rather than a group-wide level, may have served it through targeted issues like anti-money laundering and the banking royal commission, but it still allowed cracks for non-financial risks and poor behaviour. ANZ is now reverting to a group-wide risk management, allowing it to join the dots.
The 61-year-old Elliott acknowledges he could have moved faster in some areas, this echoes the reflections both public and private company leaders have often told him.
'When people look back they never say, 'In hindsight, I was far too bold, and I was too fast'. They always say, 'I should have gone faster, and I should have had more courage' And I would say the same thing'.
johnstone@theaustralian.com.au
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News.com.au
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ABC News
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Why Trump and Musk were stronger together
Sam Hawley: Breaking up can be hard and fascinating to watch from afar. So where is the disintegration of the relationship between Donald Trump and Elon Musk up to now? Today, Geoff Kabaservice from the centre-right think tank, the Niskanen Center, on the real-world consequences of the split and whether there's any chance of reconciliation between the President and the billionaire. I'm Sam Hawley on Gadigal land in Sydney. This is ABC News Daily. Donald Trump, US President: I'm very disappointed in Elon. I've helped Elon a lot. People leave my administration, some of them embrace it and some of them actually become hostile. I don't know what it is, it's sort of Trump derangement syndrome, I guess they call it. News report: Within hours of his Oval Office comments, their once-close relationship had disintegrated. The world's richest man firing back in a barrage of hostile posts on X. News report: Mr Musk, until recently a major ally of the President, continues to publicly criticise a government spending bill, even agreeing that Mr Trump should be impeached and replaced by Vice President J.D Vance. News report: Donald Trump also fired off on his truth social platform. He posted, I asked him to leave, I took away his EV mandate and he just went crazy. News report: Elon Musk then claimed that Trump is in the files about child sex trafficker Jeffrey Epstein tweeting, that is the real reason they have not been made public. Sam Hawley: Geoff, talk about a clash of the titans, if we could put it that way. How would you describe the last few days? Geoff Kabaservice: Well it's good to be with you Sam and of course this feud between Donald Trump and Elon Musk is causing plenty of amusement for anyone who pays attention to US politics. The memes practically write themselves. Is this alien versus predator? Is this the gayest thing to have happened during the whole of Pride Month so far? You know, it's amusing but it's also quite consequential in the sense that Elon Musk is not just the richest man in the world but somebody whose businesses directly impacts US national security and the fate of global affairs. And of course Donald Trump is the most powerful man possibly in the world. So it's entertaining but it's also disturbing. Sam Hawley: So there is deeper implications to all of this. One of them of course for Donald Trump is that the richest man in the world could switch his allegiances to the other side of politics. If he really wants to annoy Donald Trump he could back the Democrats, right? Geoff Kabaservice: You know, Elon Musk is unlike anyone who Trump has ever had in his circle because he's not a creature of Trump. He is independent. He has his own base in the world of business and of course his vast fortunes and the companies that he controls. So it's entirely possible that Musk could say I am flipping over to the Democrats or as he has already tweeted during the course of his epic meltdown that he is going to support a third party. Anything's possible. But of course there are also some people wondering if maybe this is a big put on of some kind, if maybe this was staged, if there's going to be an immediate kiss and make up session - to be determined. Sam Hawley: Well during an interview on NBC, Donald Trump did warn Elon Musk against that move. He said there'd be serious consequences although he didn't mention what those consequences would be. And even though he kept saying that he doesn't spend any time thinking about Elon Musk, he was happy to keep answering questions about Elon Musk. Reporter: What's your view on Elon Musk as of today? I mean, have you heard from him at all? Donald Trump, US President: I've been so busy working on China, working on Russia, working on Iran, working on so many, I'm not thinking about Elon. Geoff Kabaservice: This is a breakdown that I've been predicting for a while. I can at least say that I was correct in foreseeing that egos this Titanic could not comfortably coexist for long on the same team. But you know, Elon Musk has considerable cards, shall we say, because he is, as we've said, the world's richest man. He actually has a number of businesses that are critical to how government and the world works. Just as an example, SpaceX has under its umbrella Starlink, which does I think 80% of satellite communications launches in this country. It had a material impact on the outcome of the Ukraine war and the conduct of that war. And, you know, Elon Musk also controls a very important social media platform. It is as though he were the head of, let's say, the Washington Post 50 years ago. 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Geoff Kabaservice: You know, Trump in extremis could even deport Elon Musk, who after all is from another place, shall we say. Sam Hawley: Yeah. And Steve Bannon, a former advisor to Trump, he's actually raised that, hasn't he? Geoff Kabaservice: He has indeed. Sam Hawley: That Donald Trump should investigate the immigration status of Elon Musk, even though, of course, he is an American citizen. Geoff Kabaservice: Right. Sam Hawley: Well, of course, the stoush also did send Tesla stocks plummeting, Geoff. So that's another way, I suppose. This could harm Elon's business operations. And also Trump could tighten regulations, couldn't he, to make it harder for Elon to do business? Geoff Kabaservice: Sure. You know, it's been interesting to see the way the narrative has shifted over the last several months since Elon Musk came aboard. 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You know, the blow up between Musk and Trump got its start when Elon started criticising the Republican budget bill, which truly is a fiscally incontinent budget buster, which will add something on the order of over $3 trillion to debt. News report: Tech billionaire Elon Musk has issued a blistering criticism of US President Donald Trump's spending bill. News report: He has said that I'm sorry, but I just can't stand it anymore. This massive, outrageous, pork-filled congressional spending bill is a disgusting abomination. Shame on those who voted for it. Geoff Kabaservice: So, you know, there's a lot of things that are going wrong in the Trump-Musk relationship in the ways that they're not seeing each other eye to eye. And Elon is not very political. So in that sense, Trump could actually have the upper hand on him and could make his life difficult in many ways. And, you know, since you mentioned Tesla, you know, Tesla's stock has really cratered in recent months. People on the left really don't want to be associated with Elon Musk, but the right has never gone in for electric vehicles in the first place. And even Donald Trump's shilling for Teslas on the White House lawn hasn't really done much to encourage people on the right to buy Teslas. And one would imagine that they will be even less willing to do that now. Sam Hawley: Yeah. And Donald Trump, of course, says he's going to sell his Tesla. I wonder if this might be better for Tesla, then Elon might have somewhat of a recovery when it comes to Tesla if he's not so closely associated with Donald Trump. Geoff Kabaservice: It's kind of amusing. Like I said, this is this sandbox, quarrel of these two extremely powerful men flinging poo at each other. But, you know, let's not forget that the United States is no longer the world's unquestioned superpower. It no longer, in some sense, has the luxury to actually engage in this kind of infantile are facing a serious technological threat from China, which undoubtedly will translate into global mastery of some kind. And frankly, Elon Musk's Tesla is also losing shares not just because of politics, but because it's actually lost the technological edge to some of these other Chinese companies. And the same is true of a number of critical technology areas where the United States is almost visibly falling behind China. And certainly our manufacturing capability, we've now been dwarfed by China, which is why Tesla does so much of its manufacturing in China. So one hopes that cooler heads are going to prevail. And I strongly suspect that both Trump and Musk are looking for ways to back down from this feud. But that doesn't mean that the political alliance that existed between them can be resurrected. Sam Hawley: Yeah. I was going to say, is there a way back from the brink? And if there isn't, who do you think will be the ultimate winner of this stoush, the billionaire or the president? Geoff Kabaservice: Oh, that's awfully hard to say because it's not clear what winning would look like here. I mean, at the end of the day, Elon will still have more money than any human being has had in history, as well as however many children he wants to have, however many consorts he wants to have. One suspects Elon will be fine. And at the end of the day, Donald Trump will still be president as well. And it's unlikely that the Republican Party is going to get out from under his brand of populism anytime soon, whether or not he chooses to run for a third term in 2028, despite the constitutional prohibition on that happening. So it's hard to say who is actually going to come out winners, you know, but I think there's a fair case to be made that they were stronger together than they will be apart, and that they will never quite wield the same power and influence or even be able to affect the cultural vibes in quite the same way. Sam Hawley: Geoff Kabaservice is from the Niskanen Center, a centre right think tank based in Washington episode was produced by Sydney Pead. Audio production by Adair Sheppard. Our supervising producer is David Coady. I'm Sam Hawley, thanks for listening.
The Australian
5 hours ago
- The Australian
West Australia could realign its public holidays with eastern states
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