CBA a bank in limbo
Townsville HE fundamental, overriding, allencompassing problem that the Commonwealth Bank has in the wake of the shock Austrac “money laundering” mess was captured at a lunch in Melbourne yesterday.
It was a “dialogue” with – a chat between – the chairman and CEO of the National Australia Bank, Ken Henry and Andrew Thorburn, moderated by lawyer Peggy O’Neal ( who hopes to spend the entire month of September at the MCG).
Henry and Thorburn didn’t have to say much ( although, they and especially Thorburn, did) – just the fact that it was happening – to capture the CBA’s agony.
Putting it simply, if brutally, this is the total impossibility of the – current – equivalent duo at CBA, Catherine Livingstone and Ian Narev, sitting down to do anything remotely similar in public.
That is, talking about the bank’s culture, its strategy, its customer focus, the relationship between chairman and CEO, and their mutual expectations, the challenges of the future and how they would lead the bank into, respond to and indeed shape that future.
Impossible to envisage, unless that it, such a CBA “dialogue” was done in the context of the wearing of hair shirts and the wielding of whips, at least metaphorically and for many preferably literally, accompanied by extended grovelling mea culpas.
The CBA as an institution and an operating environment for its chairman, board and senior executive – and maybe, not- so- senior – management is headed for a world of extended pain with Austrac and all the ripples that will flow out from it.
And at the – for want of a better and probably quite inaccurate word – end of it, CBA faces a financial penalty that will clearly run into the hundreds of millions of dollars, if not more.
But what the projection of Henry and Thorburn really drove home was the seriously negative consequences of the unbridgeable schism that has been opened between chairman and CEO at CBA and the appointment made for that CEO with an oncoming bus.
Abstracting from the Austrac and other controversies, Narev has been an outstanding CEO.
I’m certainly not suggesting either that he should be excused from responsibility for them, or that they can be excluded from a full and proper as- sessment of the CBA’s performance even in simple financial terms or indeed broader measures of success.
Just that, abstracting from those controversies, you would not want to be losing Narev as CEO; and you most certainly would not want his departure and its timing driven by public opinion, however measured, or regulatory fiat.
That’s the first problem: prematurely losing a very good CEO. And it’s made worse by the fact it will be an extended departure: he’s not only a “dead man walking” but the CBA will be in limbo until it’s resolved.
It is always a challenge to find a new CEO. Whether coming from a good, bad or indifferent CEO, it is always a step deep and totally into the unknown. It is a challenge made that much more difficult in today’s world of disruption.
CBA has all that; and it has to find its new CEO not only before it intended to, but in two linked contexts that make the selection even tougher and also could have significant, severe and unpredictable long- term consequences.
The first is that instantly every internal candidate is ruled out – and indeed the broader executive succession process disrupted if not completely fractured.
Whether or not the board understands or accepts this reality – given dramatic emphasis by APRA’s move to inquire into CBA’s “culture and governance” – the next CEO cannot be already “in the building”.
Secondly, this finding and appointing of the next CEO – with all the challenges that will pose to maintaining the momentum developed under Narev at the same time as “culture and governance” are being upended – will be happening under the cloud of regulatory intervention and consequences.
The more one thinks about it, the more you understand that the earth really did move under the CBA three weeks ago.