McEwan’s fine balancing act

  • By Christine St Anne

NAB CEO Ross McEwan had just finalised the bank’s transformation strategy when the health pandemic struck but the bank chief sees some positives ahead.

Introduced as the ‘turnaround king’ by Bloomberg Television’s Yvonne Man, McEwan spoke abut the immediate challenge of protecting the bank and its people as COVID-19 unfolded in March while also needing to drive change.

Of course McEwan was already well known for turning Bank of Scotland around. NAB’s transformation strategy would focus on a leaner and more focused business.

“I was quite an interesting situation. We started the strategic review back in December last year and just as we were coming to the conclusion of that review, we ended up with this crisis on our hands,” McEwan said at the a global Bloomberg event on Monday.

“We decided to remain focused and keep going [with the strategy] as well as try and take advantage from this kind of a crisis. Here he spoke about opportunities amid the trends in the move away from cash, cheques and the use of ATMS.

“It has put forward many of the trends that may have taken 10 years to unfold. We are now thinking about how can accelerate on our strategy.

“That is, what are the parts of the strategy that we bring forward to in the next 12 months not the 36 months and how can we shape the business to do a better job with customers using a lot more technology.”

We did the strategic review on that same day and we raised capital. But my view was to be decisive and look after the balance sheet. It is going to see this bank through and also ensure it remains strong

McEwan also spoke about the lessons learned from previous crisis within the context of the changes he drove at RBS but added that COVID was significantly different because of its immediacy.

“I was talking to businesses on a Monday and by the Thursday they had closed their doors.”

Nevertheless, McEwan said that there were some lessons that could be gleaned from the 2007 financial crisis particularly around capital strength.

“Firstly, now's the time to look after the balance sheet of a bank. While there is a concern about profit and loss, the balance sheet is the priority we could all focus on from a banking perspective.

It was the reason why NAB trapped the market in April for a $3.5 billion capital raise which also saw the announcement of its first-half results brought forward.

“We did the strategic review on that same day and we raised capital. But my view was to be decisive and look after the balance sheet. It is going to see this bank through and also ensure it remains strong.
“That's something I certainly learned in the UK with my experience at RBC.”  

Having a large exposure to small business lending – compared with the other big banks – McEwan recognised that not all businesses would survive.

“Our view was that supporting a good business going into the crisis would mean that it will be a good business coming out the crisis but it will take some time.

“If it was a struggling business going into the crisis it is very unlikely it will survive.”