National Australia Bank’s chief financial officer Gary Lennon is retiring after 15 years, including seven as CFO bolstering expectations that chief executive Ross McEwan will stay on at the helm three years into his term.
Mr McEwan joined NAB in late 2019 from Royal Bank of Scotland where he turned the troubled UK-lender around after the global financial crisis. At the time of his appointment, he predicted NAB would take three to five years to be transformed, leading to market speculation that he could depart leaving the bank in good shape.
National Australia Bank chief executive Ross McEwan. Louie Douvis
Jefferies analyst Brian Johnson said Mr Lennon’s departure precedes Mr McEwan’s “expected departure”, leaving open the door for Nathan Goonan, who replaces Mr Lennon as CFO, to become the next chief executive.
Mr McEwan is credited with restoring NAB’s focus on relationship banking in its prized business bank and restoring focus and discipline in retail lending. His success has arrested a long period of market underperformance, Mr Johnson said.
“Decades-long strategic missteps and poor historical risk/reward metrics created lots of latent potential which McEwan has harvested given disciplined execution,” Mr Johnson said.
“However, at 65 yrs old and 3 years into an expected five-year tenure, CEO succession is looming with internal candidates Angela Mentis – Digital, Andrew Irvine – Business & Private Bank, Rachel Slade – Personal Bank. McEwan’s departure could be taken negatively with NAB a near consensus buy rating and domestic institutions near market weight.”
The bank has struggled, however, to win agreement from the Finance Sector Union for its most recent pay deal and is facing Federal Court action for overworking staff, despite Mr McEwan’s pledge before joining to stamp out weekend working.
Mr McEwan is understood to have told the bank’s senior executives late last year that he was “energised” by the challenges that lay in front of NAB.
Gary Lennon will depart NAB in October. Eamon Gallagher
While unrelated to the current turmoil, Mr Lennon’s retirement comes as NAB and other banks have struggled to contain rising costs as wages have grown and inflation has spiralled.
NAB had promised to limit its cost growth to 2 per cent to 3 per cent in the year to September 2022, but revised the target to between 3 per cent and 4 per cent. It registered cost growth of 3.9 per cent for the 2022 financial year.
Like its big four peers, NAB also needs to repay $15 billion of Reserve Bank funding this financial year and $18 billion in financial year 2024 and will need to pay more for deposits and wholesale funding given the current market turbulence.
NAB’s group executive for strategy and innovation, Nathan Goonan, will take over the CFO role on July 1, with Mr Lennon staying on to assist in the transition and other projects until October.
Mr McEwan said Mr Lennon had been “instrumental in helping the bank navigate a number of key challenges” during his time and wished him well in retirement.
The strategy and innovation role will no longer exist, and a new structure will be determined. Mr Goonan joined the executive committee three years ago and Mr McEwan said he had “driven a much sharper focus on accountability, performance and execution within NAB” during this time.
“Nathan is a very talented executive who led the development of our NAB Group Strategy and has played a key leadership role in all our major strategic moves in recent years,” Mr McEwan said.
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