Wrecking ball or visionary? ANZ CEO’s job cuts spark backlash and hope
ANZ Banking Group’s big job cuts are a necessary response to the challenges of artificial intelligence and digital competitors, which pose a serious threat to Australia’s big four banks, a top fund manager says.
George Boubouras of K2 Asset Management told The Nightly that ANZ’s move to appoint Portuguese outsider Nuno Matos as chief executive shows the bank’s board had to choose between an internal appointment, who might have delivered more of the same under-performance, or an external candidate who could reset its culture and strategic direction.
“They need to get better, and an outsider CEO means they can really pivot,” the chief investment officer said in an interview Friday.
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By continuing you agree to our Terms and Privacy Policy.“There’ll be criticism regardless and that’s a good thing. Criticism of management should be expected as normal. So the CEO needs resilience.”
Market watchers complain about the 20 years of poor performance in the industry as boards in Europe and the US have delivered horror capital losses or insolvencies for shareholders, in part because of their refusal to appoint outside CEOs.
On Australia’s benchmark share index of top 200 companies, 71 per cent were led by internal appointments, versus 50 per cent in 2019, according to a 2021 report by consultant Heidrick & Struggles.
Nunogeddon
Last Tuesday, ANZ flagged 4500 job cuts equal to 8 per cent of its workforce, triggering criticism by unions and irate employees. As senior management heads also rolled across the bank, media outlets blasted the CEO’s style as ‘Nunogeddon’ and compared it to the Hunger Games.
“Look, ANZ’s had a series of issues particularly with bond and regulatory scandals,” countered Mr Boubouras. “And the board needs to show this is the new direction we’re going.
“It’s really just MBA business school 101. You can go more of the same with an easy internal CEO appointment, or go fresh for a reset, with a long-term vision. But he won’t have a honeymoon period, no, as institutional investors have the highest standards.”
ANZ backs Matos
ANZ shares traded for $33.18 on Friday afternoon and have delivered investors zero capital growth over the past 10 years, despite a record-breaking bull run for national house prices and strong immigration growth.
Other banks have risen thanks to a strong property market, which drives demand for mortgages. AMP’s chief economist, Shane Oliver, on Friday said that house price growth could accelerate from a forecast gain of 7 per cent in 2025 to 7 per cent to 8 per cent in 2026, which should help banking profits.
ANZ’s decade of letdowns has been punctuated by regulatory and cultural problems, corporate restructures, the acquisition of Suncorp’s banking arm, and doubts over its ANZ Plus digital strategy, which has underwhelmed customers alongside investors.
“For me quite clearly it needed radical change with fresh eyes that can lay out where does financial services in banking in Australia want to be in the next 10 to 20 years?” said Mr Boubouras, whose firm oversees $5 billion in assets, with one fund having a relatively small position in the bank’s shares.
“The basic rule of thumb for any board is getting the right CEO in place as you’ve three key stakeholders of customers, staff and shareholders to keep happy. Now Matos needs the buy-in, he has the mandate, so we’ll see if it’s the right decision.”
Mr Bourbouras said it is impossible to know whether ANZ’s pivot to Mr Matos’ wrecking ball-style will work, but that the big-four banks in Australia all face the same problem of profit margin compression on more competition.
In particular, he said Macquarie Bank has got ahead on the major home loan lenders of ANZ, Commonwealth Bank, Westpac, and National Australia Bank by reaching borrowers through mortgage brokers.
“Big banks’ margins have a structurally lower pathway, so the “less-from-less” strategy Matos highlighted for me is right, because more of the same is predictable and where’s the turnaround in the business? The fund managers should ask the tough questions to make sure he delivers for stakeholders as they’re the guardians of people’s investments,” said Mr Boubouras.
