Good morning and welcome to the National Australia Bank AGM. A modest crowd, with a median age probably in the late 60s – and sporting the full gamut of attire from bow ties and Melbourne Cup hats to stubby shorts and Blundstone boots – has made its way into the International Convention Centre at Sydney’s Darling Harbour.
The traditional welcome to the land by an Aboriginal elder has been completed, and it’s time to get under way. What can we learn about modern Australian banking from today’s gathering?
1. Phil Chronican, the chairman, takes the stage first. Chronican is the perfect chairman for modern times, in two respects. Firstly, he is solid, dependable, calm, contrite. He doesn’t deviate a single comma from the pre-released address transcript. He says the right things about NAB’s loss of trust and need for change and sounds like he means it. Targets for growth? Not much to say. Ambition? God no. That’s not what Chronican is here for, not in this environment. It is 20 minutes before there is any mention of the performance of the business.
2. Secondly, he’s perfect because he wasn’t in that role a year ago, which is generally the most beneficial quality a chief executive or chairman can have in Australian banking. He shares this attribute with Ross McEwan, who can trump him on this score because the ex-RBS man has only been CEO for three weeks.
3. McEwan takes the microphone and the accent in the convention centre sound system shifts from Australian to Kiwi. “I have heard some very plain talking,” he says of his early days in the job. He outlines key areas for improvement – all of them abundantly self-evident, like getting the basics right – and says lots of Australian-bank-AGM-bingo things like “this is your bank, not ours.” But he is even more understated than Chronican, with no force of delivery. No “friends, Romans, countrymen” bombast here. McEwan, it seems, is here to listen.
4. Forty minutes in, it is time for questions before item one. We will still be on questions ahead of item one three hours from now. And in this respect, the AGM is representative; six days ago, most of these people were in the same room for the Westpac AGM, which lasted six hours in the aftermath of CEO Brian Hartzer’s sudden fall.
Take an Australian man of a certain age and give him a microphone and you just have to live with the consequences, which are rarely brief
5. Something you have to realize about Australian bank AGMs. They can last pretty much indefinitely. The days are behind us when Jack Tilburn, the AGM activist, used to take the stage with a question that could last half an hour and would embrace the weather and his thoughts on lunch – Tilburn died in October 2018 at the age of 91. But still, take an Australian man of a certain age and give him a microphone and you just have to live with the consequences, which are rarely brief. Elsewhere, those without ribald opinions are sometimes here just for the lunch, but most are here because their retirement depends on the reliable NAB dividend and just lately it’s been shrinking. The AGM worldview is a small one.
6. Questions in this AGM series have tended towards two poles. There are the numerous members of the loose affiliation known as “bank warriors”, who take to the microphones in bow ties and hats to complain about the treatment of ordinary customers by Australian financial institutions, often raising extremely specific questions about the treatment of individuals in between quoting Adele Ferguson’s book Banking bad. And then there is Chris Schacht, a former senator, who has epitomized the sense of anger and frustration of investors. Schacht stole the show at the Westpac AGM and is in no better mood today. “It’s a form of masochism if you’re a shareholder in banks now,” he says. “We keep turning up hoping things will get better.”
'Disaster after disaster'
7. Schacht expresses a common sentiment: that people like him have been coming to AGMs for decades now watching chairmen and chief executives promise everything is going to be different. Schacht has been a shareholder since 2003 – during which time he’s seen the share price fall from A$32 to A$25 – and has had a gutful. “Every time there is a scandal, someone says the same words you have said today, that we will be better, and next year there is always another scandal. It hasn’t changed.” Schacht has been polishing a few insults for the occasion – he calls the board failed capitalists, destroyers of shareholder value and purveyors of unconscionable greed. A former politician, Schacht says: “If I had done 1% of what this board has allowed the bank to do, I would have been thrown out of Parliament House, drowned in Lake Burley Griffin [the centerpiece of Canberra] and everyone would have cheered,” he says (to which people do, indeed, cheer).
8. Schacht’s opprobrium fits the mood, particularly because the night before this AGM it emerged that the corporate regulator, ASIC, has alleged the bank broke the law 10,000 times over five years in its financial planning division. There is widespread disbelief at this, a year after the Royal Commission claimed the scalps of chairman Ken Henry and CEO Andrew Thorburn and a new era was supposedly ushered in. “It’s disaster after disaster after disaster,” says one shareholder.
9. One has to admire ASIC’s newfound ballsiness in deciding to drop this on NAB a few hours before the first annual general meeting of its new chairman and CEO. “Obviously this did come rather late in the piece,” says Chronican.
10. One curious sub-plot of the AGM season is that it seems to have become a proxy on climate change opinion. On one occasion, apropos of nothing, a shareholder takes the microphone to announce that climate change is an epic hoax and that without coal we would all be sitting in the dark. In many settings this would be a prompt for raised eyebrows and a spot of derisive heckling. Here, half the room breaks into applause. When an environmental activist asks for assurances that NAB will step back from backing coal, there are groans throughout the room. It feels like we have gone back in time to 1950. NAB, for its part, commits to its sustainability objectives, including reductions in coal exposure.
11. Related to this is a counter-argument from a line of shareholders who have had enough of contrition and want the banks to stop apologizing and get back to earning money to get the dividend back up again. “Get off your knees and start fighting,” says one.
12. Six hours in, by the time things are finally wrapping up and a few things have actually been voted upon, nobody is looking particularly happy. And there are rare moments of empathy in the room. Mary Curran, representing the Australian Shareholders’ Association, concludes her questions on the new ASIC allegations with something approaching pity. “You’ve got a tougher job than you signed up for,” she says. “Thank you for that,” replies Chronican. “That’s exactly how it feels.”13. This is life in Australian banking a year after the Royal Commission. Nobody is talking about growth, opportunity, new markets, ambition. Everyone is talking about apology, self-analysis, reparation, change. The best attribute an executive can have is to be new. And the best a shareholder can do is keep taking the microphone, shouting at the board and pleading for their dividends to come back. And don’t expect it to be much different a year from now.