“We won’t seek to talk our way out of this”: NAB’s Henry

  • By Kate Weber

As expected, the royal commission dominated National Australia Bank’s annual general meeting with the bank’s chair Ken Henry stating that he understood the bank's responsibility to its customers and NAB is striving to make amends for past misconduct.

Many of the men who attended the royal commission hearings dressed in bowties also joined the meeting to have their say on the bank’s failings, again donning the ‘whistleblower bowtie’.

“We are listening to you, we will try again” Henry said in his opening statement.

Henry went on to say NAB will “learn from your feedback” and the bank accepts accountability for its behaviour.

“We won’t seek to talk our way out of this. We will work our way out.” Henry continued to say.

NAB was also hit with a shareholder strike against its executive pay, with 88 per cent of shareholders voting against the remuneration report.

In his speech, Henry said the Board had commenced a review of its remuneration, “recognising your concerns”.

“This remains a work in progress, but I wanted to assure you that we are committed to further transparency and simplicity,” he said.

Henry also spoke of NAB’s overhauled introducer program and begun a customer remediation program.

NAB has also completed refunds of Plan Service Fees for over 340,000 affected members and has a remediation methodology plan with ASIC.

The strategy will see NAB Financial Planning refund adviser service fees to those customers who didn’t get the services they paid for with completion in 2019.

Successes highlighted

Along with recruiting additional risk management expertise, NAB has also invested $450 million in compliance and risk.

Henry’s comments were quite in contrast to his remarks made during his royal commission hearing where he stated “it could be ten years” before changes to NAB’s culture are seen.

NAB CEO Andrew Thorburn apologised again for the actions of NAB during his opening speech and spoke about his reflections on the past year.

A shift away from customers, short-term focus, greater incentive compensation and internal rules were the four big reasons Thorburn gave for the bank’s failings.

Thorburn said, “This has led to inertia – and as a result we lost the local connections we previously had.”

Thorburn highlighted some of NAB’s successes over the year including the decision to remove default interest rates for customers affected by drought in July 2018.

He also spoke of the $4.5 billion investment over three years to make “NAB simpler and faster.”

“These actions are real and they’re real for our customers. And we have committed to further actions in 2019, including even greater support for those in the regions.” Thorburn said.

Addressing the attended Thorburn, who recently announced he would take extended leave over January, said: “I know you have been disappointed and upset by issues of the past year. We have been too – we are determined to get better. We are already making good and necessary changes.”

Investors move on banks

On the same day as the NAB and ANZ annual general meetings played out, the Australian Council of Superannuation Investors CEO Louise Davidson welcomed the decision by Henry to rethink the remuneration scheme.

ACSI’s members include 39 Australian and international asset owners and institutional investors and collectively manage $2.2 trillion in assets.

“The unprecedented size of the vote against the NAB remuneration report reflects the fact that investors take issue with the payment of executive bonuses in a year when the royal commission highlighted systemic breaches of the law and mistreatment of customers within the banks,” ACSI CEO Louise Davidson said.

“It was the decision of the board to award such significant bonuses to the executive team that led to such a strong vote against the report. Davidson said

“Reducing short-term bonuses, rather than zeroing them, was a hollow gesture and failed to meet investor and community expectations about accountability.”

ANZ also received a strike against its remuneration report, joining both Westpac and NAB.

“ACSI supports the ‘two-strikes’ rule on remuneration but notes that it places shareholders in a position of only being able to express a view on bonuses that have already been paid,” Davidson said.

“Perhaps the time has come to consider whether shareholders should have a greater opportunity to prevent outcomes like this, through the introduction of a binding vote on pay. For example, companies in the UK must give shareholders a binding vote on pay policy and may not make any payments that are outside of that policy.”