Costello urges Henry to go before new CEO

FUTURE Fund head and former federal treasurer Peter Costello says outgoing National Australia Bank chairman Ken Henry should not be appointing a new boss at the besieged bank.

Mr Costello yesterday said if NAB were “managing itself well”, Mr Henry would exit before a new chief executive was appointed.

Days after the bank was heavily criticised in the final report of the financial services royal commission, NAB announced both Dr Henry and chief executive Andrew Thorburn would depart.

While Mr Thorburn finishes on February 28, Dr Henry will leave once he helps appoint the group’s next permanent chief executive.

Mr Costello’s Future Fund — which manages $147 billion worth of assets on behalf of the Federal Government — is a major investor in the Australian banking industry.

Speaking as the fund released a quarterly performance update yesterday, he praised Mr Thorburn and Dr Henry for taking responsibility for NAB’s woes.

But Mr Costello added that “I’m not sure they’ve handled the transition well”.

Dr Henry should depart be- fore the next CEO was chosen, Mr Costello said, “and then a new chairman or chairwoman would appoint the CEO”.

“I don’t think it is good practice to have an outgoing chairman to appoint the new CEO,” he said.

“The first thing any CEO coming in will want to know is who is the chairman they are going to have to be working with.”

In 2001 Dr Henry was appointed Treasury Secretary by Mr Costello and the then prime minister, John Howard.

Reflecting on the royal commission, Mr Costello said it was a “good exercise in highlighting bad conduct”.

“I don’t know if any charges will come out of it,” he said.

“It’s possible, I think, but that’s still being looked at.”

For the year to December, the Future Fund chalked up a 5.8 per cent return after a lacklustre end to the sharemarket year — below its 6.6 per cent target but better than the average 0.6 per cent return for managed funds.

The Future Fund was set up by Mr Costello 12 year ago when he was treasurer to invest and cover unfunded pensions for public servants.