Macquarie Chief To Exit On A Record

The Age

Thursday February 7, 2008

Marc Moncrief, Banking Reporter

AUSTRALIA'S highest-paid executive will step down in May, promising that the small merchant bank he built into a global powerhouse will weather the global credit crisis.

Shares in Macquarie Group plummeted 9% on the announcement that chief executive Allan Moss would retire after delivering the results for the year. Mr Moss reaffirmed the financial services giant would book another record profit, targeted at $1.8 billion, for the year to March 31.

"That, if it is achieved as we expect, will be an increase well over 20% in a market where very few financial institutions in the world will be able to report an increased profit for the corresponding period," Mr Moss said.

The shares ended trade at $61.10, down $6.06.

Mr Moss said problems in the US economy had affected the real estate market more than expected. He said if current falls in the price of real estate funds where the group was invested were realised, it would cut $70 million from profit.

But he insisted the bank was exceedingly solvent. The market value of investments in the group's specialist funds was $403 million above the book value at January 31.

Mr Moss joined Macquarie - then a branch office of Hill Samuel - in 1977. He headed the team that transformed the local office of the British merchant bank to an independent Australian investment bank in 1983.

Ten years later he was chief executive. Profit has increased nearly thirtyfold during his time leading the bank.

"Thirty years ago I joined a small Australian organisation, an organisation of 50 people operating in two offices - one small office in Sydney and another small office in Melbourne," Mr Moss said. "Today, we have nearly 12,500 people operating very successfully in every major financial services centre in the world."

Success in building the business has brought Mr Moss his share of controversy. Last year he took home $33.5 million - more every day than the average Australian makes in a year. Then prime minister John Howard said the pay packet was "over the top".

The previous year, when Mr Moss made $12 million less, then federal treasurer Peter Costello famously said it was "hard to think that anybody would be worth that kind of salary". Since losing government, Mr Costello has been rumoured to have discussed a future as a Macquarie Bank employee.

Mr Moss will be replaced by Nicholas Moore, head of Macquarie Capital Markets.

Mr Moore is credited with developing the "Macquarie model", a process of securitising infrastructure assets that catapulted the bank to fame among global investment banks.

Mr Moore has been a central figure in several headline-grabbing deals in Macquarie's recent past, including the tilt in 2005 for the London Stock Exchange and last year's failed attempt to take Qantas private.