Is Fahour out of favour?

Two months ago there were only two serious candidates to succeed John Stewart as chief executive of National Australia Bank. Now, despite one of the favoured duo withdrawing from the race, it would appear the field is wide open.

When Michael Ullmer, then NAB's chief financial officer, told chairman Michael Chaney and Stewart that he longer wanted to be considered for the CEO role, it appeared he had gifted the position to Ahmed Fahour, the CEO of the bank's Australian operations.

Until then NAB had two contrasting choices – the calm, experienced and cerebral Ullmer or the energetic, youthful and occasionally abrasive Fahour. Ullmer, who remains on the board and has been appointed deputy group chief executive, either came to the conclusion that he didn't want the baggage that comes with a CEO role or perhaps thought he was not going to be offered it.

Fahour is seen to have done a very good job reshaping the Australian business, including the somewhat risky and sensitive integration of the MLC wealth management business with the Australian banking division. Cash earnings from the Australian region were up 17.7 per cent in the year to September. Fahour is also regarded as having recruited exceptionally well, recently convincing the well-regarded former Melbourne managing partner of PricewaterhouseCoopers, Andrew Hagger, to join his executive team.

It would appear, however, that although it seemed Fahour had seen off his only real rival for the CEO role when Stewart retires – probably in about two years' time – that his stocks are slipping within the bank and new rivals are emerging.

It has been noted that Stewart has been stocking up on executive talent to the point that he has been criticised for running a top-heavy organisation. That may be a deliberate strategy in order to give Chaney and the NAB succession committee a broader range of candidates. Certainly it has ignited speculation within the bank's senior echelons that Fahour's star has faded to the point where he now isn't favoured to get the nod.

Internally, there are murmurings that Fahour's assertive and independent, almost entrepreneurial, style of management – an issue that polarised opinions when Fahour was CEO of Citibank's Australasian operations – has opened the succession process to other candidates.

Among the many senior NAB executives seen to be in the running to succeed Stewart are (in no particular order) the CEO of Bank of New Zealand, Cameron Clyne, the CEO of NabCapital, John Hooper, the bank's newly appointed CFO, Mark Joiner, MLC's Steve Tucker, the executive general manager for development and new business, George Frazis and the bank's Europe CEO and longtime Stewart lieutenant, Lynne Peacock.

If she were interested, which some within NAB doubt, Peacock would be regarded as a front-runner. Frazis, who played a key role in the proposed acquisition of Great Western Bank in the US – and to whom Great Western will ultimately report – has an opportunity to press his claims now NAB's period of introspection in the wake of the foreign currency options trading scandal is over and it's on the lookout for acquisitions.

It was notable that in elevating Ullmer to the deputy CEO position and announcing a reorganisation of other senior positions, Stewart didn't single Fahour out as first among remaining equals. Instead, he chose to say that the appointments of Joiner, Frazis and (slightly earlier) Clyne to their new roles would enhance the development of NAB's "strong group of next generation leaders," which included Fahour, Hooper and Tucker.

Stewart has made it clear that he would like his successor to come from within the bank's ranks, something that one would expect Chaney – who was one of a consistent line of internally-generated CEOs at Wesfarmers – to concur with.

If Stewart does retire in two years – he is on a rolling one-year contract and has been deliberately vague about the precise timetable for his departure – the internal candidates would have a year, 18 months at most, to impress Chaney and his board. If the multitude of potential candidates believe Fahour has fallen back into the pack, that should make for an interesting and competitive recruitment environment.