Change of Kiwis at the top of Oz bank

Ian Narev. Photo / Supplied

Sir Ralph Norris announced his retirement yesterday as head of Australia's biggest bank, Commonwealth Bank of Australia (CBA), but denied that criticism from the public and politicians played a part in his decision.

Norris will be replaced as chief executive by another New Zealander, 44-year-old Ian Narev.

The former ASB Bank and Air New Zealand chief executive, who has drawn flak over the years for the bank's interest rate policy and his multimillion-dollar salary, was the subject of graffiti attacks on his home last year.

Asked if the intimidation was behind his move to retire, Norris said: "I am a little tougher than that."

Norris's package was estimated to be worth A$16 million ($20 million) - the highest of any of the big four banks - last year.

CBA chairman David Turner credited Norris as putting the bank in a strong financial and market position that had delivered the best returns to shareholders of all the major banks for the last five years.

"He led the group through the global financial crisis while remaining focused on the transformational change programme," he said.

Norris was no stranger to controversy during his six-year tenure with CBA. He triggered a wave of criticism in 2008 for raising the bank's interest rates outside the Reserve Bank of Australia's own interest rate cycle.

At times he has been on the sharp end of criticism from Prime Minister Julia Gillard, Treasurer Wayne Swan, and the Australian media.

CBA drew widespread condemnation last year when it moved to increase its rates by 45 basis points - almost double the Reserve Bank of Australia's 25 basis point increase.

The move triggered thousands of online postings from customers. Gillard joined in, urging people to "vote with their feet and change banks if they aren't happy".

Norris said yesterday the CBA's move to increase rates was "absolutely the right decision" given high wholesale funding costs.

Asked if he was right to stand his ground on interest rates, Norris said a chief executive's role was not to be popular.

"It is to be respected and to do the right things for the business, and I certainly have no regrets for any of the decisions that I made," he said.

"There is only one thing worse than a profitable bank and that's an unprofitable one, and when you see the damage that unprofitable banks have done to economies in the UK, Ireland, Spain and the United States, and the amount of stress that can be put into government balance sheets, then I think making the right decision around pricing is something that all chief executives should be focusing on." Aside from the global financial crisis, Norris said the biggest challenge he faced at the bank was changing the culture to a more collaborative and customer-focused one.

"Many people said to me that it would be very difficult to change the culture of this organisation and I would have to say that it's turned out to be much easier than I had anticipated," he said.

Asked how he felt about the personals attacks aimed against him last year, Norris said it was "always disturbing" when debates became personalised.

"Having your house focused on by television and then ending up with graffiti over the front walls of your house and having your wife intimidated, and things of that nature ... I don't think that speaks highly of some elements of the media," he said.

"The issue comes down to one of debating the issue constructively and not letting it disintegrate into personal attacks," he said.

Norris said his decision to leave was made 18 months ago. He was originally asked to stay on for five years and was later asked to stay on for longer.

Asked what he will do next, Norris said there were no announcements to make at this point.

Ian Narev
* Will take over from Ralph Norris as chief executive of Commonwealth Bank of Australia in December.
* Aged 44.
* Lives in Sydney with his wife and two daughters.
* Joined Commonwealth Group in 2007 and led its A$2.1 billion takeover of the Bank of Western Australia.
* Worked with four of the United States' top 10 financial institutions while a consultant with McKinsey & Company.
* Was a top legal scholar at University of Auckland, Cambridge University and New York University.
* Played "Davie" in the New Zealand television series Children of Fire Mountain at age 12.