It may have taken a while but John Morschel and the ANZ Banking Group finally got their ideal man, with David Gonski recruited to succeed Morschel as ANZ chairman next year. If there were a perfect candidate for that position, Gonski would tick almost every box.
There are two big, related issues facing ANZ over the next few years and beyond. One is the continuing development of its ‘super regional’ strategy, under which it aims to have up to 30 per cent of its revenue being generated outside its core Australasian footprint by 2017. The other is to choose the right candidate to succeed Mike Smith when he retires, which will probably be in two or three years’ time.
The chairman will play a major role in both. In Gonski, ANZ has enlisted someone who uniquely fits its requirements.
Gonski is one of the most respected non-executives in the country. He chairs the Future Fund, Coca-Cola Amatil and Investec, and is a director of Singapore Telecommunications. He has been chairman of the ASX and director of Singapore Airlines and Westfield. In an earlier career, he was regarded as one of the best and brightest lawyers – and then investment bankers – in the region.
He’s also extraordinarily well-connected in both business and political circles. But perhaps the two most relevant items in his CV are the Singaporean board seats he has occupied and the fact that he was a director of ANZ from 2002 to 2007. Therefore, he knows the bank and banking.
The super-regional strategy is still evolving and there are inherent risks involved in expanding into Asia. With Mike Smith’s term as ANZ CEO closer to its end than its beginning, the looming financial system inquiry and a tide of new regulation pouring towards the sector, the ANZ role required someone with an unusual range of skills to succeed Morschel.
In the near term, ANZ’s board needs a strong chairman because it has a strong CEO.
Mike Smith, CEO since 2007, was initially and obviously over-qualified for the role he took on in 2007 when Charles Goode oversaw the replacement of John McFarlane. The choice of Smith, then Asian head of HSBC and its global head of commercial banking, was an obvious statement of ANZ’s ambitions in Asia.
He has proved to be a very astute choice, opting for a conservative expansion, buying assets selectively and populating the upper echelons of the bank with executives with experience of operating in the region. The results, which are increasingly positive, are beginning to flow. The shape of the new ANZ and the connectivity of its regional operations has become clearer.
Nevertheless, the strategy carries with it significant latent risks. Organisations with powerful CEOs with understandable ambition for their legacies require strong and knowledgeable chairmen.
While there are strong candidates to eventually succeed Smith within the bank (despite the loss of the obvious successor, Alex Thursby, to a CEO role in Abu Dhabi) Gonski will play a key role in the critical process of identifying Smith’s successor, who will be the person who continues the execution of the strategy.
Morschel, it must be said, has been a good chairman of the bank.
He gained the job in 2010 unusual circumstances. Sir Rod Eddington had been Goode’s choice (and that of the wider ANZ board) because of his vast experience of operating in Asia and the connections he made during two decades with Hong Kong’s Swire Group. However, he got caught up in the fallout of the Allco collapse.
The board then turned to Morschel, who had a long and distinguished career in financial services and who had been on the board since 2004. It was never going to be a long-term appointment because of his age, so he placed a major focus on identifying his successor.
The process has taken some time because Gonski appears to have been reluctant to relinquish the prestigious and powerful position he holds as chair of the guardians of the $92 billion Future Fund, which he will now do to avoid the potential for conflicts of interest.
That’s good news for Peter Costello, who has coveted and quietly campaigned for that role within the fund that he created. One suspects this was aimed at protecting at least some of the surpluses he generated as Federal Treasurer from being dissipated in the last few years of the Howard government.
Gonski controversially gained the role as chair of the fund after the Gillard government commissioned him to seek the view of the guardians as to who should succeed David Murray. The review endorsed Costello, but the Labor government appointed Gonski instead.
Costello missed out when Gonksi became chairman in April last year for what was supposed to be a five-year term. He was, however, was appointed acting chairman of the fund by the Abbott government today – and would appear near-certain to get the role on a more permanent basis.