A Reason For The Busily Engaged Signal

Sydney Morning Herald

Wednesday April 30, 2008

Elizabeth Knight

The decision by National Australia Bank's chief executive, John Stewart, to join the board of Telstra is a bizarre one - unless the announcement of his departure from the bank is less than six months away. I believe this to be the case.

NAB is considered to have the best bench strength among its peers and three names have emerged as potential candidates for the top job - the head of New Zealand, Cameron Clyne; the boss of nabCapital, John Hooper; and the industry glamour man in charge of Australia, Ahmed Fahour.

NAB's chairman, Michael Chaney, has experienced successful transitions with internal promotions and there is a belief that he is leaning towards the same model as he contemplates a replacement for Stewart.

There are plenty of views among those close to the action as to which of these three is favourite but the best intelligence to date is that Clyne is ahead. The New Zealand operation is travelling well and he is considered a strong team player and highly thought of by the board.

Stewart's appointment to Telstra is considered the first leg of a departure process that could take up to a year and see him running the bank alongside his successor. The very fact that he has taken a non-executive board position in the middle of a banking crisis suggests his successor will be announced sooner rather than later.

It should be remembered that for several years Chaney ran Wesfarmers and held a board seat with BHP. However, these days this behaviour is frowned on, and the West Australian company was far smaller than NAB.

Stewart's replacement is the only big executive job left in Australia for a while. Over the past couple of years the reins of the other major banks have been handed on. David Murray moved over for Ralph Norris at the Commonwealth Bank and is now heading the Future Fund. David Morgan has joined BHP Billiton's board, having retired from Westpac. His replacement, Gail Kelly, handed her job at St George to Paul Fegan.

It is curious that we have heard nothing of the former ANZ boss John McFarlane since his noteworthy farewell party last year. His replacement, Mike Smith, has been busy putting out fires since McFarlane left.

While NAB has the only chief executive job up for grabs, there is one chairman's position that must be coming up soon - at ANZ.

The chairman has been under fire over the past couple of months as ANZ has needed to increase its provisioning for bad debts.

In order to retain the position, Charles Goode and his board scrapped the mandatory 70-year retirement age last year but he will have to deal with disaffected shareholders this year who might be looking for a scalp.

His argument for staying on was always that it would have been destabilising if he and McFarlane were to leave about the same time. But Smith is now firmly ensconced and that excuse no longer has any currency.

Thus the question is: who on the board will replace Goode?

The former Reserve Bank governor Ian Macfarlane would have to be one possible candidate.

On a related matter, the board of BHP Billiton is looking particularly interesting, given that its chairman, Don Argus, must eventually retire.

Sitting around that table are the Commonwealth Bank chairman, John Schubert, and the former Westpac boss David Morgan. It would be difficult to imagine that both would not have their eye on the chair - this is despite speculation that the former BHP chief executive Paul Anderson would be in contention.

Argus is probably in no hurry to leave and realistically will not be going anywhere until the takeover for Rio is completed or abandoned. There is every chance that, if an agreement between the two miners is struck, a point of negotiation could be the make-up of the board. In that event, Rio's chairman, Paul Skinner, might land the job.