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Banking industry

Banking Expert with Perfect CV to Clean Up NAB's Losses

Strategic Insights

— 1 min read

John McFarlane, the current CEO of ANZ bank, has a career spanning over four decades, with expertise in corporate banking, treasury, and investment banking. His experience in running derivatives trading operations and restructuring businesses with poor-quality profits makes him an ideal candidate to strip the risk out of National Australia Bank (NAB) following its $360 million foreign exchange trading losses. However, McFarlane's perfect curriculum vitae may not be enough to guarantee his success in another role, as he is already doing it for one of NAB's competitors.

Key Takeaways:

  • John McFarlane, ANZ bank CEO, has a 40-year career in corporate banking, treasury, and investment banking.
  • McFarlane has experience in running derivatives trading operations and restructuring businesses with poor-quality profits.
  • He was instrumental in downscaling ANZ's derivatives trading and investment banking activities, believing that they produce less dependable earnings.
  • McFarlane's analysis was driven by his deep experience in the markets he intended to retreat from.
  • The board's backing for McFarlane's restructuring efforts was likely due to his experience and credibility.
  • Under McFarlane's leadership, ANZ's corporate banking share of lending assets decreased from 54% in 1997 to 33% after the acquisition of National Bank of New Zealand.
  • McFarlane intends to further reduce ANZ's corporate banking share of lending assets.
  • NAB's new CEO, John Stewart, is under pressure to downsize NAB's corporate banking operation, but this may not be feasible given its key profit center status.

Statistics:

  • ANZ's corporate banking share of lending assets decreased from 54% in 1997 to 33% after the acquisition of National Bank of New Zealand.
  • NAB bought or sold foreign exchange options with a gross total of $297.3 billion in 2001-02.
  • NAB also doubled the amount of interest rate options it bought and sold, from $56.8 billion in 2001-02 to $100.2 billion in 2002-03.

Sources:

  • [The Age, Malcolm Maiden, Saturday, March 22, 2003]

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