Banking Royal Commission draws blood: NAB chairman Ken Henry and CEO Andrew Thorburn are out

SAEED KHAN/AFP/Getty ImagesAndrew Thorburn, National Australia Bank (NAB) Group Chief Executive Officer.

  • NAB CEO Andrew Thorburn and chairman Dr Ken Henry are stepping down.
  • Their departures come 72 hours after the release of the final report of the banking royal commission, which singled out both men for special criticism.
  • Henry said in a statement: “Andrew and I are deeply sorry about this.”
  • Thorburn will finish at NAB on February 28. Henry will retire from the board once a new permanent CEO had been appointed. Phil Chronican, a current director, becomes interim CEO.

NAB CEO Andrew Thorburn and chairman Dr Ken Henry have spectacularly departed the bank just 72 hours after the release of the final report of the financial services royal commission, which singled out both of them for special criticism.

Thorburn will finish at NAB on February 28.

The report of the Hayne royal commission reserved special criticism for Henry and Thorburn, with Commissioner Kenneth Hayne pointing contrasts between the leaders of other banks, whom he said seemed well apprised of the challenges ahead.

However, Hayne said he 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”.

Henry will retire from the board once a new permanent CEO had been appointed.

In a statement, Henry said: “Andrew and I are deeply sorry for this”.

Philip Chronican, a current NAB Director with extensive domestic banking experience, will serve as acting CEO effective March 1, subject to regulatory approval.

The bank will now initiate a global search process for the CEO role while actively considering a range of quality internal candidates.

In a statement, Thorburn said he understood accountability and has “always sought to act in the best interests of the bank and customers”.

“It has been an honour to be the CEO of NAB, and to have been part of NAB since 2005,” Thorburn said.

“I have had a number of conversations with the Chairman this 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.

“As CEO, I understand accountability. 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. As a result, I spoke with the Board and offered to step down as CEO, and they have accepted my offer.

“I have devoted myself to serve NAB and my hope and ambition is that the bank can move forward and achieve its vision of being trusted by customers for exceptional service.”

Henry said he and the Board had recognised change was necessary. “The timing of my departure will minimise disruption for customers, employees and shareholders,” he said.

“This is naturally a difficult decision but I believe the Board should have the opportunity to appoint a new Chair for the next period as NAB seeks to reset its culture and ensure all decisions are made on behalf of customers.

“I am enormously proud of what the bank has achieved and equally disappointed about what the Royal Commission has brought to light in areas where we have not met customer expectations. Andrew and I are deeply sorry for this. My decision is not made in reaction to any specific event, but more broadly looking at the bank’s needs in coming months and years.”

Hayne’s criticism of NAB was searing. Here’s the key passage (emphasis added):

NAB also stands apart from the other three major banks. Having heard from both the CEO, Mr Thorburn, and the Chair, Dr Henry, I am not as confident as I would wish to be that the lessons of the past have been learned. 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. I thought it telling that Dr Henry seemed unwilling to accept any criticism of how the board had dealt with some issues. 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. I thought it telling that in the very week that NAB’s CEO and Chair were to give evidence before the Commission, one of its 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.

Analysts and commentators quickly concluded that Henry and Thorburn appeared to be in an untenable position.

The bank entered a trading halt on Thursday afternoon, saying: “Trading in the securities of the entity will be temporarily paused pending a further announcement.”

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.