NAB’s McEwan: The right banker for challenging times

  • By AB+F Editorial

The recent hire of the new National Australia Bank CEO Ross McEwan has drawn a positive response from the industry as the bank continues to confront challenges on both the regulatory and economic front.

The New Zealand-born McEwan resigned from his job as CEO of Royal Bank of Scotland in April and will take on the helm of the bank no later than April 2020. 

NAB's interim CEO Phil Chronican will transition to chair in November 2019. 

McEwan joined RBS Group as CEO UK Retail in 2012 from the Commonwealth Bank of Australia, where he led the retail banking services for five years.

He had previously been CBA’s executive general manager with responsibility for its branch network, contact centres and third-party mortgage brokers.

McEwan’s experience in the UK particularly in effectively tackling challenges in turning the culture around in RBS are being seen as big positives.

He is the “right banker for a very challenging outlook in Australia,” UBS bank analyst Jon Mott said in a client note. 

“In many ways the banking environment in the UK is three to five years  ahead of Australia, Mott. 

Indeed, as he notes, the UK has already confronted ultra-low interest rates; intense mortgage competition; open banking; fintech penetration; accelerated technology investment; reputational challenges; heightened regulation and government focus; BEAR; and ongoing mis-selling concerns.

“We believe McEwan's experience in turning around RBS in this environment gives him a unique insight into the challenges ahead. 

“As a result, we believe NAB's restructuring initiatives are likely to accelerate once he commences in 2020 and are centred around the customer. We do not expect a simple continuation of NAB's current strategy,” Mott said. 

Mott believes that the combination of McEwan as CEO and Chronican as chair will be “one of the strongest and most experienced teams in banking in Australia and internationally.” 

Likewise Morningstar bank analyst David Ellis also sees a “powerful combination” in the two executives with both complimenting each other.

Although Ellis expected Mike Baird, the bank’s current head of consumer banking to take on the top job, he sees merit in McEwan’s appointment adding that the hire has “good long-term upside to underlying performance”.

In fact, on his numbers, the bank’s recent total shareholder returns have been disappointing – with a 1.9 per cent return for 12 months and 1.5 per cent per year for five years.

Like Mott, Ellis acknowledges that McEwan’s experience is suited to the challenged regulatory environment.

“Working in a hostile regulatory environment, dealing with a tough political situation and major and painful organisation restructuring...his experience and skills will be tested in the challenging post Royal Commission operating environment in Australia," Ellis said.

Ellis notes that McEwan’s to do list will include kick-starting residential lending growth, improving customer service levels, delivering on product innovation, boost branch productivity and ensure its “sector leading loan quality is maintained”.

“The bank’s peer-leading business banking division needs to drive harder on sustainable and profitable growth initiatives, with particular focus on agriculture and health,” Ellis noted.

Both McEwan and Chronican will also have to finalise plans for the embattled MLC wealth division.

While the current strategy is to offload that business, Ellis acknowledged that there may not be much demand for “an underperforming, compliance-challenged integrated wealth business”.

Similarly, Macquarie University risk specialist Professor Elizabeth Sheedy said McEwan’s experience in turning around a culture in a bank “will serve him well”. 

“They are a number of years ahead of us in dealing with a lot of these misconduct risks,” Sheedy said. 

“He went through a massive program of cultural change at the Royal Bank of Scotland. 

“When I heard about his appointment, I was delighted.”  

In a press conference, McEwan said he would like the bank extend its lead in a number of “areas such as business banking, agriculture and health, and other areas where I believe we should consistently lead such as customer service.

“We must also meet and exceed the expectations of our many stakeholders.”

He also remains committed to the bank’s transformation program.

In terms of the reputation of the bank post the royal commission, which saw the departure of both its CEO and chair, McEwan acknowledged, “some things need repairing.”

“This is a bank that has incredible strength. It has some real opportunities going forward.

“There are some things that need repairing and one of the reasons I’m here is to find strength in those sorts of challenges for a bank. I think we can repair the things that went wrong with this bank over the next few years.”

He is married with two adult daughters.