Bank boss achieves balance

BIG MOVE: Departing BNZ boss Andrew Thorburn, who’s heading to Australia.
BIG MOVE: Departing BNZ boss Andrew Thorburn, who’s heading to Australia.

Former BNZ boss Andrew Thorburn is stepping up to take the top job at parent bank NAB, and all the responsibilities that come with it. He spoke to Richard Meadows about God, green tea, and the GFC.

It's tough at the top. Just ask Cameron Clyne.

The departing National Australia Bank chief executive was ultimately responsible for managing assets worth A$900 billion (NZ$975b), or roughly six times New Zealand's GDP.

The fate and fortunes of some 42,000 staff - enough to populate a small city - lay in his hands.

Clyne was surprisingly frank when announcing his resignation last month. He said more than five years in the top job had taken a personal toll on him, and he wanted to spend more time with his young family.

Apparently, there's some things that not even an A$7.7 million pay packet can buy.

Clyne's successor, outgoing BNZ boss Andrew Thorburn, is following closely in his footsteps.

The promotion is a big step up for the Melbourne-born banker, but his unique approach to work-life balance may help insulate him from the pressures of the job.

It'll be nose to the grindstone for the next six weeks, before Thorburn takes a month off to refresh and prepare for what will be a "pretty demanding challenge".

The first item on the to-do list - naming his heir - has already been crossed off. Anthony Healy, who has led BNZ's business banking for almost five years, officially took the helm last Monday.

Like Thorburn before him, he'll be given plenty of breathing room to run the bank's New Zealand arm.

"NAB have realised, and it's certainly my philosophy too, that New Zealand is best run with a high degree of autonomy and a very competent CEO and board who are encouraged to make the right decisions," says Thorburn.

The two banks will move a little closer once they share a common banking platform, which is something Thorburn hopes to accomplish during his time leading NAB.

Of more pressing concern are the troubles in the United Kingdom. NAB's ill-fated foray into the struggling market has seen it stuck as the perpetual underdog of the Aussie banking market.

Its share price is still dragging the chain behind its record-high rivals, and investors haven't been shy in voicing their displeasure.

Rather than rush in and make his mark, Thorburn says he'll take a "disciplined" approach to the legacy issues.

"My job will be to work with them to be sure they execute their strategy, and deliver the numbers they said they would, and to continue to be open to looking at exit options in a sensible way."

Thorburn is used to adversity.

He took over the BNZ leadership with the worst possible timing in October 2008, literally two weeks after investment bank Lehman Brothers collapsed.

That precipitated the meltdown of the global financial system, and a baptism of fire for the fledgling CEO.

Did he have a heart-in-mouth "Oh God" moment?

"Yep, I did. I'd been a banker all my career. What was happening was your worst nightmare. All the normal things you rely on were just not working. It was a very, very extreme situation."

But he claims to have actually relished the challenge of trying to find new solutions.

Bear in mind this is the same man who earnestly called a five-year period of earthquakes, recessions and general doom-and-gloom "a wonderful experience".

Earlier he described leadership roles as a constant state of tension between fear and excitement, which is apparently something he thrives on.

"In hindsight, you learn more from difficulties, and failures, and stress, than you do from success," Thorburn says.

It's expected that a new CEO will put out a call-to-action of sorts, bring in new people if needed, and generally rally the troops.

"These next few months . . . will help inform me of how bold I need to be," says Thorburn.

You wouldn't expect him to shy away from making big calls, and possibly delivering some home truths to his countrymen.

An Australian media outlet which called Thorburn a "household name" in New Zealand might have got a bit carried away, but his outspoken views have made him well-known to the business community.

Topics that have come up for criticism by him include New Zealanders' obsession with buying houses and anomalies in the tax system, not all of which align with the bank's own interests.

Popping his head above the parapets to fire off a shot or two is something he will "absolutely" continue to do in Australia, he says.

"You have to build a credibility of knowing the issues, and that takes time to understand the complexities of them."

Thorburn also openly implored fellow business leaders to follow suit.

"I do believe that business, which is often seen cynically - and sometimes with good reason - should have a broader voice in society.

"New Zealand needs more CEOs to do that, because we're a smaller country. The government has a disproportionate impact and control of the economy's resources and key tools, like taxation."

However, he says it's got to come down to individuals.

"They have to be human about it. They have to be a bit more vulnerable. If all you do is talk about your company's position, that's seen as narrow and self-serving - and rightfully so."

Thorburn insists he's not just a banker.

"I am passionate about it, and I will always do my best. But I haven't got my whole identity invested in this job."

He says the things that keep him grounded are his wife of 27 years, Kathryn, his three kids, hobbies, holiday time, and his strong Christian faith.

However, there'll be no Bible-thumping sermons at work, or moral calls made from a religious standpoint.

"Leaders need to have character and principle, and have a direction. I think my faith informs me of how to do that," he says.

"My faith also gives me perspective to realise that my work is important, but it's not the most important thing."

That's highly relevant given the reasons for his former boss's departure.

As Clyne said on a conference call last month, a lot of people talk about work-life balance, but his own situation in resigning from the bank was how it looked when family came before career.

Thorburn's strategy includes keeping fit, bashing the drumkit in his garage, and always taking his annual leave.

With family here and a New Zealand passport, he still intends to get on his tractor down in Coromandel and tow his tinny out for a spot of fishing.

Thorburn's own kids, aged 18, 21 and 23, have all flown the nest, which makes it easier.

But finding the right balance is something the 48-year-old has learned only in the past 10 years.

"If I had my time again, I would have been more present, when there," he says.

"But I recovered. I invested a lot of time in the last decade, and I think I have an excellent relationship with each of my children."

Thorburn says he's met a lot of men who put all of themselves into their career and chasing success.

"I can't tell you how many I've seen who've been hollow, and shells at the end of it. It just wasn't worth it."

Thorburn also claims money isn't his prime motivation, and that he genuinely loves his job.

It's something that was reaffirmed when he was home alone on a Sunday afternoon, a couple of weeks ago.

"I was sitting in the front room, the sun was coming in and I was reading [Australian cartoonist] Michael Leunig with a cup of green tea.

"The first one has got this character making a choice; he's going left or right. One arrow says ‘the life you lead', and the other one says ‘the life you wish to lead'.

"I think I'm leading the life I wish to lead.

"If I didn't want to do it, I wouldn't do it."


Andrew Thorburn was appointed chief executive of BNZ in October 2008. Here's how the bank fared under his leadership during the five years to September 2013.


BNZ's peculiar accounting practices mean its results are notoriously volatile, flung about by estimated market values of derivatives which are not actually realised.

That's partly why it's the only big lender not chalking up an endless run of record profits. Its best ever profit was the $785 million haul in the year to September 2008, which was boosted by the swings in valuations as well as a one-off sale of Visa shares. Five years later, that number had actually fallen to $685m, down by some 13 per cent.

However, on a "cash profit" basis, which adjusts for the volatility, the bank made $788m, which is up a healthier 20 per cent over the five-year period.

In the latest half-year results to March, BNZ is on track to top that figure again.

Thankfully, with the accounting guidelines set to change soon, the wonky numbers will no longer be an issue.


Huge profits always grab the headlines, but it's often the return on the total asset base and on shareholders' equity that tells the real story. Back in 2008, BNZ was earning a 1.3 per cent return on its assets. By last September, that had shrunk to 0.9 per cent. Its competitors have done somewhat better, clinging on to an average return of 1 per cent.

The bank is ahead of the curve on a return on equity basis, which was 12.7 per cent in the year to September 2013, above the average 12.3 per cent.

Another key metric of profitability is the net interest margin, which is the difference between the cost of borrowing and loan pricing. Under fierce competitive pressure, BNZ maintained a margin of 2.33 per cent in September, ahead of the system-wide 2.24 per cent.


The BNZ might not be squeezing every drop of profit out of its assets, but it is growing them faster than the competition. Total assets grew from $64 billion to $75b over the five years, up by 17 per cent, and well above the total industry growth of 12.3 per cent.

BNZ has also performed well in the hotly contested mortgage market. Its loan book grew from $24b in 2007 to $29.5b in 2013, up 22 per cent, or roughly 4.4 per cent a year.

That's despite a more conservative approach to high loan-to-value ratio (LVR) loans, which some rivals wrote like they were going out of fashion prior to the new rules coming in.

Banks' collective mortgage books have grown 18 per cent over the same time period.


Bad and doubtful debts are a good indicator of how seriously a bank approaches risk management, as well as the ethics of its lending practices. In September 2008, pre-crisis, BNZ had 0.31 per cent of its gross lending tied up in impaired assets, which was bang on the system average. The collective average has tripled to 0.91 per cent, as of September 2013.

BNZ's own portfolio now sits above that at 1.1 per cent, which is slightly worse than some of its competitors.


Last month, BNZ received a four-star customer satisfaction rating from research agency Canstar Blue. That was on par with ASB and Kiwibank, with only The Co-operative Bank awarded the full five stars.

In a Consumer New Zealand survey conducted in August last year, BNZ scored an impressive 92 per cent satisfaction rating. That was ahead of the average 89 per cent, but behind some major rivals, including ASB and Kiwibank.

Sunday Star Times