NAB hires Bain & Company for strategic planning review
The new chief executive officer of National Australia Bank (NAB) Ross McEwan has brought in consultants from Bain & Company to assist with a four month strategic planning review, as the bank’s new boss looks to steer NAB into more stable waters.
McEwan is up for a major challenge at National Australia Bank. The Big Four bank is struggling to cope with the rapidly evolving regulatory space, with maintaining its profitability in an environment of record low rates, and with bad press following scandal in its retail banking arm.
Still, many believe McEwan is the right man for the job, having previously successfully led Royal Bank of Scotland through its largest turnaround in history. RBS was so severely battered by the global financial crisis that it needed the UK government to save it from downfall in a £45 billion taxpayer-funded bailout ten years ago.
During his reign, McEwan restructured the bank’s toxic debt, downsized the organisation to become more agile and, most importantly, placed the customer at the heart of services and products. “We need to be a smaller, simpler and smarter bank,” McEwan said during his maiden speech to employees at a bank shortly after taking the top role.
While National Australia Bank is nowhere near the state RBS was in, there are a number of similarities. First, NAB needs to trim much of its fat, particularly in its branch network. The bank has more than 700 branches, over 120 more than rival ANZ for instance.
Second, when benchmarked to top performers, NAB has a relatively high number of managers and employees compared to its peers. Under the previous chief executive Andrew Thorburn, NAB announced a cost-cutting initiative that would slash 6,000 jobs, however, McEwan is now likely to increase the target. During his time at RBS, the bank’s headcount fell from 137,000 to 66,600.
Thorburn was dismissed from his duties at the bank earlier this year following heavy criticism by the Royal Commission on the NAB’s practices of charging fees for services it did not provide. The bank’s reluctance to remediate customers for the scandal also led to the departure of NAB chairman Ken Henry.
In addition, NAB faces a number of regulatory risks. Its balance sheet is considered ‘too risky’, and McEwan will seek to shrink risk weighted assets. He will also aim to restructure some major assets classes, in a bid to boost return on equity – as it stands, NAB has the lowest return on equity among its major Big Four peers of ANZ, Commonwealth and Westpac.
Teaming up with Bain
As part of his strategy setting process, McEwan has hired management consultant from consulting firm will assist “a three-to-four month review”, adding that the engagement is led internally, with Bain’s consultants tapped to bring in strategic insights and conduct supporting analysis.
Bain & Company works for many of the globe’s largest banks, and the consultants will also be expected to bring lessons learned and benchmarks to the table, helping McEwan and NAB management with shaping their agenda.
In related news, earlier this year Commonwealth Bank hired fellow US consultancy McKinsey & Company for a large cost-cutting transformation.
