Latest / The Front / Nunogeddon is coming for Australian banking

Transcript

Nunogeddon is coming for Australian banking · The Front

• 0:05
  Speaker 1: From The Australian. Here's what's on the front I'm Claire Harvey.
• 0:08
  Speaker 1: It's Thursday, September eleventh, twenty twenty five. Opposition leader Susan
• 0:14
  Speaker 1: Lee has sacked firebrand Senator Jacinta numbm for Price from
• 0:17
  Speaker 1: the front bench after Price refused to apologize for remarks
• 0:22
  Speaker 1: about the Indian community. Price says she has legitimate concerns
• 0:26
  Speaker 1: about the scale of Labour's migration intake. Lee says Price
• 0:30
  Speaker 1: fails the test for a position of responsibility and can't
• 0:34
  Speaker 1: continue if she won't back her leader. HERMAS leaders will
• 0:39
  Speaker 1: never be safe. That's Israel's message after it made an
• 0:43
  Speaker 1: airstrike against Hamas leadership in Qatar, triggering a brawl with
• 0:48
  Speaker 1: the White House. Donald Trump slapped down Benjaminette Nia who
• 0:52
  Speaker 1: over the strike, which came as Qatar was hosting ceasefine
• 0:55
  Speaker 1: negotiations aimed at getting Israeli hostages home. He says he
• 1:00
  Speaker 1: will not allow immunity for terrorists anywhere in the world.
• 1:04
  Speaker 1: Those stories alive right now at the Australian dot com
• 1:08
  Speaker 1: dot a U. If you work in banking, watch out.
• 1:12
  Speaker 1: Thousands of jobs are being cut as bosses prepare for
• 1:15
  Speaker 1: a leaner future and shred projects that aren't working today.
• 1:20
  Speaker 1: The man swinging the axe at Australian banking's biggest employer,
• 1:24
  Speaker 1: an Z, they call him Nunageddon.
• 1:38
  Speaker 2: Oh Vily, this is a very very special moment to me.
• 1:40
  Speaker 2: It really means a lot.
• 1:42
  Speaker 1: Nunomatos is an adventurous fifty seven year old ocean swimmer
• 1:47
  Speaker 1: who's just moved his family to Australia and when he
• 1:51
  Speaker 1: was announced as the incoming chief executive of A and
• 1:54
  Speaker 1: Z Bank in twenty twenty four, you could feel the
• 1:57
  Speaker 1: energy radiating through his warm Juguese accent.
• 2:02
  Speaker 2: My grandfather was an Indian and he actually in his thirties,
• 2:07
  Speaker 2: he moved to Africa where he met my grandmother. She
• 2:10
  Speaker 2: came from Portugal. I met my wife in Perusius, Pruvian
• 2:14
  Speaker 2: and we have two boys. One was born in Spain,
• 2:17
  Speaker 2: the other was born in Brazil. And actually at home
• 2:21
  Speaker 2: we always speak three languages every single day, and well
• 2:25
  Speaker 2: I can't forget our two dogs, one from the US
• 2:28
  Speaker 2: and the other from Mexico. We are kind of united
• 2:31
  Speaker 2: nations at home.
• 2:34
  Speaker 1: He made his career from his start straight out of
• 2:36
  Speaker 1: UNI at Portugal Central Bank to a globe trotting banking
• 2:40
  Speaker 1: career sound like one long, fabulous dinner party.
• 2:45
  Speaker 2: After living in nine markets from Asia to the Americas,
• 2:49
  Speaker 2: Australia feels a perfect country to live, to be happy
• 2:54
  Speaker 2: and to develop new friends and new professional connections.
• 2:59
  Speaker 1: By the time his face were under the desk vacated
• 3:01
  Speaker 1: by former boss Shane Elliot, Martos was sounding a little
• 3:05
  Speaker 1: more weary.
• 3:07
  Speaker 2: We have to run faster and at the same time
• 3:11
  Speaker 2: with more excellence operating at this full potential.
• 3:15
  Speaker 1: Here's what that meant.
• 3:16
  Speaker 2: The A and Z will cut three thousand, five hundred
• 3:19
  Speaker 2: of its forty three thousand staff plus another thousand contractors.
• 3:24
  Speaker 2: The unions have gone ballistic, staggering, a catastrophic announcement for
• 3:29
  Speaker 2: so many staff who work here within the ANZ banking organization.
• 3:35
  Speaker 1: And suddenly he has a new nickname, Nunigeddin. Eric Johnston
• 3:40
  Speaker 1: is an associate editor with The Australian.
• 3:43
  Speaker 3: The mood has changed to azt ain Z was known
• 3:46
  Speaker 3: as a really warm and friendly and fuzzy bank. For example,
• 3:50
  Speaker 3: they even had meditation training courses many years ago under
• 3:54
  Speaker 3: a former chief executive, John McFarland. They had a more
• 3:56
  Speaker 3: international perspective, but they were a very warm, friendly institution
• 4:02
  Speaker 3: and that sort of allowed a lot of flexibility for
• 4:05
  Speaker 3: their workforce. And what we've seen is a sudden shift,
• 4:08
  Speaker 3: and now that shift means people are coming back to
• 4:12
  Speaker 3: the office. Last week I sat down and went down
• 4:15
  Speaker 3: to the Docklands headquarters and just worked out of there
• 4:17
  Speaker 3: for a few mornings. No one asked a question, no
• 4:20
  Speaker 3: one knew who I was.
• 4:21
  Speaker 1: Had anyone invited you to come with your laptop.
• 4:23
  Speaker 3: No, no, But they do great coffee, fantastic coffee, and
• 4:26
  Speaker 3: you just sort of park the corner there and look,
• 4:29
  Speaker 3: people were there, people were working, People were really well dressed.
• 4:33
  Speaker 3: And that's one of the things when the new chief
• 4:36
  Speaker 3: executive came in, he had complained that Australians didn't look
• 4:40
  Speaker 3: like bankers because people were really casual, ave dressing down
• 4:43
  Speaker 3: and so on. So suddenly I'm noticing a lot more ties,
• 4:46
  Speaker 3: a lot more suits are on. People were back, People
• 4:48
  Speaker 3: were in the office and they knew. There was an
• 4:51
  Speaker 3: anticipation in the air that something big was going to happen,
• 4:54
  Speaker 3: and it did.
• 4:57
  Speaker 1: Now on paper, this bank is doing quite well. It
• 4:59
  Speaker 1: made six billion dollars cash profit. Reported that this year.
• 5:04
  Speaker 1: Nuno Martos is on a two and a half million
• 5:06
  Speaker 1: dollar salary. With a two and a half million dollar bonus,
• 5:08
  Speaker 1: which I guess he might be achieving if he cuts
• 5:11
  Speaker 1: these costs. What's going wrong at ain.
• 5:14
  Speaker 3: Z, Well, just on the salary, so that that will
• 5:17
  Speaker 3: escalate to up to ten million dollars at its maximum
• 5:21
  Speaker 3: potential if all the long term benchmarks are achieved. That's
• 5:25
  Speaker 3: the way it's structured. But it is a big number,
• 5:27
  Speaker 3: six billion dollars. Wow, look at that pure profit. Certainly
• 5:31
  Speaker 3: big number becomes less impressive when we start thinking, Okay
• 5:34
  Speaker 3: and z's asset base is about six hundred billion dollars.
• 5:37
  Speaker 3: It's kind of reasonable, but banks generally can do a
• 5:40
  Speaker 3: bit better. So Comewealth Bank is a really well run
• 5:43
  Speaker 3: bank and it generally returns about thirteen and a half
• 5:47
  Speaker 3: to fourteen percent. So you can see you can see
• 5:50
  Speaker 3: the gap there. Nuno Martos. He's coming from HSBC, a
• 5:54
  Speaker 3: big global bank, and he's seen the immediate problem. A
• 5:59
  Speaker 3: and Z's got a list its shareholder returns, and this
• 6:03
  Speaker 3: is one way that he wants to go about doing it.
• 6:08
  Speaker 1: There's a lot of talk about big changes to something
• 6:10
  Speaker 1: called A and Z plus What is that and what
• 6:13
  Speaker 1: would that mean?
• 6:14
  Speaker 3: So what it is for the last six years under
• 6:17
  Speaker 3: the former management, a Z has been building what it
• 6:20
  Speaker 3: calls at the front end, a new app called ain
• 6:22
  Speaker 3: Z Plus. It's been promised for ages and talking five
• 6:26
  Speaker 3: or six years in the planning. So far they've spent
• 6:29
  Speaker 3: one point five billion dollars on building. Effectively an app
• 6:33
  Speaker 3: that they've been promising is going to be rolled out.
• 6:36
  Speaker 3: It's starting to be rolled out to some customers. They're
• 6:39
  Speaker 3: promising in the world your hoold ten minute mortgages. It
• 6:42
  Speaker 3: will do your dishes, it'll do everything, but it's yet
• 6:46
  Speaker 3: to be delivered. The upside for ain Z though, it
• 6:49
  Speaker 3: allows processes to be done much more quickly and efficiently,
• 6:53
  Speaker 3: and I'll betting on with less people as well. That's
• 6:57
  Speaker 3: yet to eventuate. Nuno Martos has come in and looked
• 7:00
  Speaker 3: at this and he's thought of straightaway, why has this
• 7:03
  Speaker 3: app not been delivered? Why are we still building this thing.
• 7:06
  Speaker 3: There's a lot of mission creep in this app. So
• 7:08
  Speaker 3: he wants to take control of that. He just wants
• 7:10
  Speaker 3: to pair it back and just get it in people's
• 7:13
  Speaker 3: hands and get it delivered. And so by this time
• 7:16
  Speaker 3: next year, the expectation is it will start to be
• 7:19
  Speaker 3: the main app. The aims and customers use.
• 7:23
  Speaker 1: We know the banks watch each other very closely. They
• 7:25
  Speaker 1: all put rates up within hours of one another, all
• 7:28
  Speaker 1: down depending on which way things are going. We've already
• 7:31
  Speaker 1: seen nab An ounce some job cuts. Would you expect
• 7:34
  Speaker 1: people in banking to be now nervous that all the
• 7:36
  Speaker 1: banks are going to look at whether they can bring
• 7:39
  Speaker 1: their whipfulces down.
• 7:42
  Speaker 3: I think what this does it gives others cover to
• 7:46
  Speaker 3: also do that. Look, Westpac has in recent years cut
• 7:50
  Speaker 3: about seventeen hundred rolls, but he didn't come out with
• 7:53
  Speaker 3: a big announcement. It just said, look, we want to
• 7:55
  Speaker 3: target a lower cost base. Come off bank again. You'll
• 7:59
  Speaker 3: hear every now and then. They might cut jobs, but
• 8:01
  Speaker 3: not in a whole cell way. And there's certainly under
• 8:04
  Speaker 3: no pressure to slash and burn because again they run
• 8:06
  Speaker 3: quite well. But it does give some of the others
• 8:09
  Speaker 3: a little bit of cover. It also gives Corporate Australia
• 8:11
  Speaker 3: cover to think, you know, if I come out tomorrow
• 8:14
  Speaker 3: and cut a thousand jobs, I'm not going to look
• 8:16
  Speaker 3: like the bad guy. That guy down the road at
• 8:17
  Speaker 3: AMS he's still looking pretty terrible. So that's what the
• 8:21
  Speaker 3: message is. But really, interestingly, what's happened is that since
• 8:25
  Speaker 3: the COVID pandemic, there hasn't really been wholesale job cuts.
• 8:28
  Speaker 3: So this was a real big wake up call. And
• 8:32
  Speaker 3: all large corporates have actually been hoarding labor because they're
• 8:35
  Speaker 3: so scared of a tight labor market, and when the
• 8:38
  Speaker 3: economy does go into an upswing, they'll have nobody to
• 8:40
  Speaker 3: be able to fund that growth or deliver into that growth.
• 8:44
  Speaker 3: So that's what we've heard of this term called jobs hoarding.
• 8:47
  Speaker 3: So this is a real change that mindset.
• 8:51
  Speaker 1: Coming up the long road down Under for Nuno Martos
• 8:54
  Speaker 1: and what other banking workers should expect. At the top
• 9:14
  Speaker 1: of this episode, we heard what Nuno Martos sounded like
• 9:18
  Speaker 1: when he got this job. He'd gone for a couple
• 9:21
  Speaker 1: of other big jobs. Reportedly he wanted the top job
• 9:23
  Speaker 1: at HSBC, didn't get that his name was murdered to
• 9:26
  Speaker 1: be the boss of Westpac. That didn't happen, got this
• 9:28
  Speaker 1: job at A and Z and then in his introduction
• 9:31
  Speaker 1: interview he spoke very warmly about moving to Australia with
• 9:33
  Speaker 1: his dogs and his kids. I feel like if he
• 9:36
  Speaker 1: knew he was going to be coming in here and
• 9:38
  Speaker 1: sacking a lot of people, he would have been less
• 9:41
  Speaker 1: effusive about the big opportunity for himself and his family.
• 9:45
  Speaker 1: He might have been a little bit more sensitive about that.
• 9:47
  Speaker 1: So therefore has he looked under the hood and found
• 9:50
  Speaker 1: some things that have shocked him.
• 9:52
  Speaker 3: Look, I think he knew exactly what he was going
• 9:54
  Speaker 3: to do when he signed up. And an interesting background
• 9:57
  Speaker 3: Portuguese banker worked at a Spanish for many years called Santander,
• 10:01
  Speaker 3: then moved across to HSBC, another big global bank, and
• 10:05
  Speaker 3: he was an executive on the rise at HSBC, and
• 10:09
  Speaker 3: they put him in what was probably their biggest problem
• 10:12
  Speaker 3: child business, which was Mexico. So he ran Mexico for
• 10:16
  Speaker 3: HSBC for many years, and that was after it had
• 10:19
  Speaker 3: a number of regulatory skirmishes, particularly around money laundering, and
• 10:24
  Speaker 3: you can imagine the complexity of that. Now. He really
• 10:27
  Speaker 3: got onto the radar of HSBC management there because first
• 10:30
  Speaker 3: of all, cutting costs, winning back the trust of regulators,
• 10:34
  Speaker 3: and while growing the business with customers and look, that
• 10:37
  Speaker 3: just ticked all the boxes for HSBC. He was in
• 10:41
  Speaker 3: the running to get the top job and just narrowly
• 10:45
  Speaker 3: missed out. At the time, Bloomberg described him as something
• 10:49
  Speaker 3: along the lines as the most eligible CEO in the world.
• 10:52
  Speaker 3: So was someone who was just had to It was
• 10:53
  Speaker 3: just a matter of someone reaching out coming to Rains.
• 10:57
  Speaker 3: He knew what needed to be done, reputation for cutting
• 11:01
  Speaker 3: costs and this is his playbook exactly.
• 11:04
  Speaker 1: So what's next.
• 11:05
  Speaker 3: What we don't know is where the jobs are going
• 11:07
  Speaker 3: to be cut exactly. We do suspect there's going to
• 11:10
  Speaker 3: be in the retail bank and we do suspect a
• 11:13
  Speaker 3: bit of our business banking. He's going to run up
• 11:16
  Speaker 3: to investors in the middle of next month, October, and
• 11:18
  Speaker 3: this is where he'll present his strategy. This is how
• 11:21
  Speaker 3: we're going to go forward. He's expected to put a
• 11:24
  Speaker 3: line in the ground saying we want to achieve these
• 11:26
  Speaker 3: kind of shareholder returns and we want to achieve this.
• 11:29
  Speaker 3: And in banking world it's called a cost to income
• 11:31
  Speaker 3: ratio and it is what it sounds like. It's about
• 11:34
  Speaker 3: your costs relative to the revenue you do. So we
• 11:39
  Speaker 3: expect him to put out a number to try and
• 11:41
  Speaker 3: target a lower cost to income ratio. Australian banks have
• 11:45
  Speaker 3: a terrible track record of cutting costs. They have a
• 11:48
  Speaker 3: terrible track record of really in these big change programs.
• 11:52
  Speaker 3: Sure change happens, but then they're very short term, like
• 11:55
  Speaker 3: banks get into their old ways. Regulation is a really
• 11:58
  Speaker 3: big deal in the Australian bank market. That's where a
• 12:01
  Speaker 3: lot of the baked in costs are from as well,
• 12:03
  Speaker 3: So he's going to confront some of these challenges as well,
• 12:06
  Speaker 3: so running the bank and running it well. At the
• 12:09
  Speaker 3: same time his rival banks CBA, National Australia Bank in Westpac,
• 12:13
  Speaker 3: they are just going gangbusters on business banking, so they're
• 12:16
  Speaker 3: throwing everything at that while he's taking things out of it.
• 12:19
  Speaker 3: So that's going to be an interesting battle to watch.
• 12:23
  Speaker 1: Eric Johnston is an associate editor with be Australian. You
• 12:29
  Speaker 1: can read his reporting from the lobby of Vanz's Dockland's
• 12:32
  Speaker 1: headquarters and all the best business news right now at
• 12:35
  Speaker 1: the Australian dot Com dot a