By Angira Bharadwaj and Joyce Moullakis
ANZ has tasked McKinsey with a strategic review into how it could reshape the bank at its most senior levels as part of a broader overhaul kicked off by new chief executive Nuno Matos.
The review is expected to include advice about cutting down the number of managers directly reporting to ANZ’s 11 member executive team, given the bank has almost twice the number of its three main competitors.
The new McKinsey review comes amid a hiring freeze that has been in place since at least July 7 and is expected to remain until the end of the bank’s financial year on September 30. Managers are now required to obtain approval from ANZ chief financial officer Farhan Faruqui before they hire staff, three people familiar with the matter who were not authorised to speak publicly said.
McKinsey was already working for ANZ in its retail bank for at least six months and was in June tapped to provide advice on culture and risk management. Those are areas Matos has been focused on given concerns raised by both the banking and corporate regulator about conduct within the bank in recent years.
Matos arrived after a tumultuous period for the bank, which remains under investigation by the Australian Securities and Investments Commission for allegedly manipulating the market when it sold $14 billion in government bonds in 2023. It has been excluded from lucrative bond sales by the Australian Office of Financial Management since.
Lisbon-born Matos succeeded long-serving ANZ chief executive Shayne Elliott, having previously run HSBC’s wealth and personal banking division.
At a series of meetings last week, Matos told analysts and investors he planned to host a high-level strategy session in late September or early October that would outline where he wanted to take ANZ, according to multiple attendees who were not authorised to comment publicly. Lowering costs in ANZ’s retail banking division was among his top priorities.
Some 40 investors and analysts attended a function with Matos in Sydney last week, while a similar event in Melbourne attracted 20 guests.
“As you would expect with a new CEO, ANZ is making sure it has an efficient structure focused on our core priorities that will deliver the best outcomes for our customers and shareholders,” an ANZ spokesman said.
Brian Johnson, an analyst at MST Marquee, said he expected ANZ to provide details of its strategy in October before their full-year results, with a focus on “the predictable cost out/staff reduction initiatives of every new CEO”.
“Nuno Matos is the change agent long-suffering ANZ shareholders deserve, and based on media reports, we applaud his thus far rectification efforts,” he told clients. “Given Matos only started as chief executive a mere 77 days ago, we are impressed with his decisive actions. We don’t think … Elliott left the ANZ balance sheet nor franchise in particularly good shape.”
Johnson said Matos needed to finalise changes to his executive team quickly. Since May, three of the 11 have flagged their departure, including high-profile retail banking division chief Maile Carnegie, who had overseen the bank’s new digital banking platform Plus that had been struggling to meet targets.
The bank is hoping to announce a replacement in late August or early September. In May, before the hiring freeze, Matos recruited Santander banker Stephen White as head of operations, his first major hire.
Westpac is also seeking to lock down a permanent boss for its retail unit. Acting chief of the bank’s retail division Carolyn McCann has been pinpointed as a frontrunner to secure the role permanently.
ANZ had 21,479 staff in Australia this year. In total, it has about 44,000 staff, and has been grappling with merging Suncorp’s banking division, which it acquired for $4.9 billion last year, into its own operations.
Addressing analysts and investors in Sydney, Matos, who was flanked by Faruqui and institutional banking chief Mark Whelan, spoke not only about wanting to improve the cost-to-income ratio inside the retail division, but integrating Suncorp’s bank faster than the timeline outlined by Elliott.
ANZ’s cost-to-income ratio for the bulk of its banking operations, but excluding markets, was 47.3 per cent earlier this year, up from 46 per cent from the prior six-month period. In 2023, that number was 43 per cent. A lower cost-to-income ratio suggests a company is operating more efficiently.
Wilson Asset Management deputy portfolio manager Anna Milne said Matos’ revolution inside ANZ was welcomed by investors. “The signs we have seen so far and the noises he is making can provide investors with confidence that he is focused on cost and productivity,” she said. “From an investor perspective, it’s shaping up to be an exciting time for ANZ.”
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