Two top executives are throwing in the towel at Australia’s fourth-biggest bank

THE CHIEF executive and chairperson of Australia’s fourth-largest bank, the National Australia Bank (NAB), are quitting, the biggest scalps following a major inquiry that levelled blistering criticism at the country’s financial sector for widespread misconduct.

After a year-long inquiry that exposed a culture of greed in the financial sector, the Royal Commission this week issued a final report that singled out the NAB chiefs for their apparent unwillingness to accept responsibility for past wrongs at the lender.

The departures of NAB chief executive Andrew Thorburn and chairperson Ken Henry show the slow-burn pressure the inquiry has had on the country’s biggest companies, even as some consumer groups complained the Royal Commission went too soft.

Thorburn had ruffled shareholders by planning two months of leave on either side of the Royal Commission’s delivery of its final report, which was hotly anticipated as a watershed moment for the country’s banking industry.

After the report went public on Monday, Thorburn cancelled the rest of his leave. While he released a statement disagreeing with the report’s criticism of his attitude, he told local media on Tuesday that he was not sure he would last the week.

“I acknowledge that the bank has sustained damage as a result of its past practices and comments in the Royal Commission’s final report about them,” Thorburn said in a statement issued by NAB yesterday.

“I have always sought to act in the best interests of the bank and customers and I know that I have always acted with integrity, however I recognise there is a desire for change.”

Thorburn, who joined as NAB’s head of retail banking in 2005 and became chief executive in August 2014, will leave on February 28. Henry, a former central banker and adviser to the prime minister, will stay on as chairperson until the lender hires a new chief executive.

NAB said board member Phil Chronican, a former executive at larger rival Westpac Banking Corporation, will be interim chief executive.

Analysts see NAB’s chief customer officer Mike Baird, a former premier of New South Wales state, as a likely successor.

Thorburn and Henry join the chief executive and chairperson of the country’s biggest financial planner, AMP Ltd, who quit before the commission ended over criticism of the firm’s handling of charging customers fees without providing a service.

The NAB bosses were also questioned about “fees for no service” during the Royal Commission.

Thorburn and Henry have been specifically called out for their intransigence in the final report issued by the retired judge who ran the inquiry, Kenneth Hayne.

“Having heard from both the chief executive, Mr Thorburn, and the chairperson, Dr Henry, I am not as confident as I would wish to be that the lessons of the past have been learned,” Hayne wrote.

“I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do, and then having its staff act accordingly.”

The NAB chiefs faced shareholder anger late last year when investors voted a record 88.1 percent against NAB’s executive bonuses, versus the required 25 percent threshold.

The inquiry has recommended that 24 misconduct cases from across the sector be referred for possible prosecution without giving details on the companies. Analysts expect companies that charged fees for no service to be included.

“Until now the Royal Commission recommendations had looked disproportionately small compared to the drama and the exposés and the condemnations of the hearings,” said Allan Fels, former chairperson of the Australian Competition and Consumer Commission. But this starts to show… the commission is making a difference,” Fels added, referring to the departures at NAB.

NAB also reported a tough first quarter yesterday. | Reuters