O’Sullivan denied internal candidates had been overlooked because of the corporate governance issues engulfing the bank, instead likening Matos to a “star football player for a top team in the AFL” who was available on the transfer market.
He said ANZ decided to “move quickly and effectively” after Matos quit HSBC in August. However, he stressed Matos’ appointment did not signal a departure from Elliott’s strategy.
The new chief was unable to speak to the media due to his contract terms with HSBC, but in an interview with ANZ’s communications team, he said ANZ had the correct strategy and was headed in the right direction.
“We have to make sure that we double down in our strengths – the two scale markets [Australia and New Zealand] and our leading institutional franchise,” Matos said. “It will be a positive agenda. It will be to build on top of it, to evolve, to move forwards, to really be focused on our customers, on a strategy which is quite clear.”
Matos will be responsible for resetting ANZ’s culture, which is under heightened scrutiny by financial and corporate regulators. The Australian Securities and Investments Commission is investigating allegations traders manipulated the bond rate, forcing up the federal government’s cost during a $14 billion debt sale last year.
ASIC is set to finalise the probe by April and is likely to commence proceedings against ANZ, indicating investigators have uncovered evidence supporting the allegations, a source not authorised to speak publicly said. External lawyers are now assessing ASIC’s brief of evidence, and the regulator is likely honing in on the most egregious examples for its case.
ANZ has engaged Herbert Smith Freehills and the bank has maintained that its probe has found no evidence of wrongdoing.
Separately, the Australian Prudential Regulation Authority in August hit the bank with a $250 million capital add-on charge after ANZ admitted its markets unit inflated its bond trading figures to the federal government – portraying itself as more experienced than it was – and a workplace complaints investigation found traders in the Sydney dealing room were inebriated during working hours.
Nuno Matos has held a number of high-profile roles at HSBC.Credit: Bloomberg
O’Sullivan said ANZ’s board would reflect on the findings of an internal investigation into workplace culture led by Oliver Wyman. However, he declined to comment further on the internal investigation led by Herbert Smith Freehills into the bonds trading saga.
The ANZ board this year slashed Elliott’s short-term bonus by almost half to $1.3 million, while Whelan’s was cut by 60 per cent to $565,000, and chief risk officer Kevin Corbally lost 40 per cent to take home $624,000 amid the scandals.
Matos’ remuneration will be set at $2.5 million per annum, with short- and long-term bonuses. Elliott will remain with the bank until September 30, 2025, to provide handover support to his replacement.
Elliott was appointed chief executive in 2016 after four years as chief financial officer and head of institutional. He has simplified the bank’s Asia strategy, invested in new technology, such as ANZ Plus, and this year acquired Suncorp’s banking division.
The market did not receive Matos’ appointment warmly, with ANZ’s shares falling 3.6 per cent to $30.03.
One analyst, speaking confidentially, said it was disappointing that Whelan had missed out on the top job and that he would have made an ideal chief executive. They were also worried Matos would focus on re-growing its international arm after Elliott reversed his predecessor Mike Smith’s strategy of expanding the Asia business.
MST analyst Brian Johnson said O’Sullivan’s comment the strategy would remain the same was a “missed opportunity” by the bank to move forward.
“You need to think, ‘Is their strategy absolutely right?’ You can see them writing home loans below the cost of capital, and then if you have a look at Suncorp, that’s not without risk, and then you have this ANZ Plus [digital banking] platform, which is also not without risk,” Johnson said.
“We have a bond manipulation case that will probably be resolved one way or another in the new year, but the chair says, ‘really, nothing is changing’, and to some extent, that’s disappointing.”
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In a note, JP Morgan analysts Andrew Triggs and Kelsey Bentley said the timing was right for chief executive renewal.
”We had been increasingly of the view that an external hire would be likely given there appeared to be no obvious internal candidate,” Triggs and Bentley said. “ANZ has been the weakest share price performer of the major banks this year; however, our near-term revenue forecasts are below consensus given our more pessimistic assumption on [net interest margin] pressures.”
Meanwhile, UBS’ John Storey told clients Matos’ appointment brought a “fresh perspective and a clean slate” to make the necessary changes.
“The most pressing challenges for Mr Matos, in our view, are likely to centre around (amongst others): 1) getting familiar with the Australian and New Zealand banking landscape, 2) establishing his executive team, 3) taking a decision on the current organisational and operating structure and 4) tackling the strategic priorities of ANZ Plus and Suncorp bank integration.”
O’Sullivan paid tribute to Elliott, pointing out that he took over the top job at ANZ when the bank’s Asia expansion strategy was not working, the institutional business was not returning the cost of capital, and a number of businesses were not core to the bank.
“Fast forward to 2024, and you’ve got a bank that has put in a very strong financial performance,” O’Sullivan said. “Our institutional bank has had its best every year and is now returning a return on equity above the cost of capital; in New Zealand, the merger has been a very strong success … and very importantly, we released a lot of capital.”