NAB chairman Ken Henry delivered a candid assessment of his plans to ‘turn this bank around’ at the company’s annual general meeting on Friday.
Responding to a question at NAB’s AGM, chairman Ken Henry said his board is “very aware” that NAB has made “some huge mistakes”.
Both the management team and the board of NAB are dedicated to ensuring the bank will not be in risk in 10 years’ time, Mr Henry said.
“We have seen our mission as turning this bank around and improving NAB in the interests of shareholders,” he said.
NAB began 2016 by officially exiting its UK banking businesses with the approval of shareholders.
The bank also sold 80 per cent of its life insurance business in October, and was forced to deny the existence of “systemic issues” in its financial advice division following the release of an internal investigation.
Asked if NAB still wanted to be the ‘number one’ Australian bank, Mr Henry said the organisation is now “much smaller” than it was a decade ago.
“We have the ambition to be number one. It doesn't necessarily mean we will have the largest market capitalisation,” he said.
Instead, NAB is aiming to be ‘number one’ when it comes to performance – something that is being ingrained at every level of the bank via the use of ‘net promoter scores’, Mr Henry said.
The bank’s return on equity has also lifted from last among the big four banks to number two, he said.
When it comes to financial advice scandals, Mr Henry said NAB takes “no comfort” from the knowledge that all four banks have suffered reputational damage from the issue.
“We're doing what we can internally through our emphasis on values and improving the culture of the organisation to ensure that NAB does not have any scandals, even if the rest of the industry continues to have scandals – not that I want to see that either,” Mr Henry said.
“But I want to ensure that NAB does not have future scandals that damage the reputation of this business.”
On the topic of remuneration, Mr Henry said that “very senior people” in the organisation have received no short-term payments because of poor performance – and others have been dismissed.
In cases of poor behaviour, NAB does not accept the argument that unethical conduct has improved the profitability of the bank and is therefore in shareholders’ interests, he said.
“No. It's not in shareholders’ interests if it does not demonstrate a commitment to the values of the organisation,” Mr Henry said.
“It might be in the short-term interests of shareholders. You might be able to argue that. But it can't be in their long-term interests.”
He added that NAB is the only bank whose entire board and management team has signed up to the Banking and Finance Oath.
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