NAB leaders respond to Royal Commission's fierce criticism

Written on the 5 February 2019 by Business News Australia

NAB leaders respond to Royal Commission's fierce criticism

"We are the only bank to publicly release our assessment, which clearly outlines 26 areas where we are focusing on to be a better bank," says NAB chair Ken Henry.

National Australia Bank (ASX: NAB) shares are up this morning despite a stinging evaluation of its executives in yesterday's final report of the Royal Commission, indicating the market may have anticipated a more punitive conclusion from author Kenneth Hayne.

CEO Andrew Thorburn has cancelled his long-service leave and pledges to lead the bank with "even greater urgency and intensity", while both he and chairman Ken Henry (pictured) have taken issue with how the report singled out NAB.

Hayne said NAB 'stood apart' from the other three major banks, asserting neither Thorburn nor Henry had learned from the lessons of the past.

"More particularly, 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," Hayne said.

"I thought it telling that Dr Henry seemed unwilling to accept any criticism of how the board had dealt with some issues," he said.

"I thought it telling that Mr Thorburn treated all issues of fees for no service as nothing more than carelessness combined with system deficiencies when the total amount to be repaid by NAB and NULIS on this account is likely to be more than $100 million."

Hayne also wasn't pleased that in the very week both representatives were to give evidence before the Commission that one of the bank's staff should be emailing bankers urging them to sell at least five mortgages each before Christmas.

"Overall, my fear that there may be a wide gap between the public face NAB seeks to show and what it does in practice remains," he said.

In a response today, Henry said he was disappointed with the view taken by the Commissioner.

"I know that it is not so. The Board and I have reflected deeply on those and other issues and, as I have said previously, we take them very seriously," Henry said.

"We have said that we are not prepared to accept good intentions where urgency, consistency and discipline is required. The Board has led a deep examination of our culture, governance and accountability.

"We are the only bank to publicly release our assessment, which clearly outlines 26 areas where we are focusing on to be a better bank."

National Australia Bank CEO Andrew Thorburn

Thorburn said the report was comprehensive and would bring about change in the industry and his profession, which "no doubt will make us better for customers".

"In addition, the Commissioner has expressed his view that we at NAB may not be learning the lessons we need to from the past and, in particular, that we don't know what the right thing to do is," Thorburn said.

"As the CEO, this is very hard to read, and does not reflect who I am or how I am leading, nor the change that is occurring inside our bank.

"While we have made mistakes, I believe there is a lot of evidence that we are making sustainable and serious change to once again regain the trust of all our customers."

The chief executive added he was proud to be a banker - a "profession of service".

"I am proud to be CEO of NAB, and am more determined than ever to lead NAB with even greater urgency and intensity and show through our ongoing actions that we do what we say," he said.

"I have cancelled my planned long-service leave, aside from a personal family commitment next week.

"I will lead this personally and visibly, and alongside NAB's 33,000 employees who share my determination to be better for customers."

IOOF responds more cautiously

Another institution included in the final report was IOOF Holdings (ASX: IFL), whose acting CEO Renato Mota proferred a more subdued response.

"IOOF is fully supportive of recommendations that lead to a better, stronger financial services industry for the benefit of all Australians," Mota said in an announcement to the ASX today.

"The cultural and governance changes currently being implemented at IOOF stand us in good stead to meet future regulatory requirements. This will support the long-term prosperity of superannuation members and investors," he said.

"We believe in the value of advice and the important role that advisers play in the community. We are committed to helping financial advisers work through these changes."

As of 11am AEDT, IOOF shares were up 12.7 per cent at $5.50, while other groups referred to in the report also witnessed morning rises including NAB (+3.7 per cent; $24.92), Commonwealth Bank (+4.21 per cent; $73.26), ANZ (+5.27 percent; $26.55), Westpac (+6.59 per cent; $26.51), AMP (+9.95 per cent; $2.43) and Macquarie Group (+1.59 per cent; $118.56).

Meanwhile, the Royal Commission's recommendations to eliminate trailing for lenders has made an impact on shares of Mortgage Choice, down 24.76 per cent at $0.79.

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