I came out from Italy to Australia with my parents when I was seven. My parents moved to better their future, particularly for their children and those early years in Australia in the 1950s gave me a pretty strong work ethic. The upward mobility — what we now call “aspiration” — was very strong. Group loyalty, affinity, family — all those cultural things were important to me.
I’ve found it’s important to have a command of your own career as you navigate the corporate ladder, to have courage to take on new challenges, and to be flexible in all of that. Resilience is important for life in the corporate world. Starting with a graduate induction program, I spent 25 years at ANZ. I was identified as one of three potential CEOs and sent to Harvard. I learned I could hold my own among my international peers — and could survive outside the ANZ mothership.
In 1991, the new board of the State Bank of Victoria knocked on my door looking for a new CEO. I said no, but they returned three months later and the chair and I spent many days talking about their plans. It was an interesting challenge and opportunity, but a high-risk one. I joined the bank and after a year of analytical work, told the state government the bank was beyond salvation. Working with federal treasurer Paul Keating, the Reserve Bank governor and the Victorian treasurer, we managed to sell it into the Commonwealth Bank of Australia. That challenge was the best thing I could’ve done, because it projected my mind and my persona into the business community.
A couple of years later, I transferred to Telstra. That led me to a whole series of board exposures — Seven Network, Foxtel and IBM. I had nine years of terrific experience at Telstra, leading the transformation into a commercial entity. Then I was asked to be dean at Melbourne Business School. I also joined the boards of BlueScope Steel and Mallesons.
I trace that success back to the brave decision to move out of ANZ and take on a new challenge. A number of my peers in the same position at ANZ stayed with the bank for the rest of their [working] lives. I doubt they had the same broad exposures and satisfaction I did.
A big part of being a board director, particularly a non-executive director, is to have the strong interpersonal skills to get on with your peers around the boardroom table, but also to be open, honest and fearless in what you say — and also do that with management. The Foxtel board I chaired was particularly sensitive because there were only two major shareholders. There was me, one other Telstra person, and Lachlan Murdoch and James Packer representing News and the Packer empire, respectively. Balancing the competing issues and corporate agenda was quite tricky, particularly in a company that had just been set up. We were all learning our way through it and there was a lot of give and take.
I joined the National Australia Bank (NAB) board in 2004 after a clean-out of half of its board following a foreign currency debacle. The Australian Prudential Regulation Authority was in the bank and much remediation had to be done. It took us years to get through that. The post-Royal Commission environment reminds me a lot of those years.
One of the things that struck me when I joined NAB was how much the industry had changed — from being heavily regulated in the 1960s and early ’70s, to a deregulated industry still very much anchored in its past, to an industry that had been totally unleashed by 2004. Banks were being driven by lending — rather than knowing how to fund yourself before lending. There were a lot of brokers, many intermediaries between the bank and the customer, and wholesale funding was a big issue.
I shared the Royal Commission’s outrage. I felt there was a betrayal of trust, that pockets of management were doing things the NAB board certainly would never have condoned. It’s regrettable that remediation is going to take some time. It’s important that the banks keep the customer whole; that the cost in time and the distraction of the remediation is shrunk as much as it can be; and that banks rebuild their standing and reputation in the community.
There are multiple cultures in large organisations. With NAB, there was the culture within the bank, but the culture differed depending on whether an individual was in the business bank, personal bank or NAB Capital Markets, which had a merchant/investment banking culture.
Unethical behaviour is complex and I’m sure it was not condoned by the board, but the idea of culture is quite nebulous. That’s what [former NAB chair] Ken Henry AC and [former NAB CEO] Andrew Thorburn were trying to say. Eventually their opinions cost them their jobs.
The issue of culture and the banks comes down to trust and loyalty. How do you build trust in an organisation? How does a director of a listed company, particularly a bank, a non-executive director, trust what is happening in the organisation?
You build trust by aligning values and objectives, getting personal interaction that is positive over time. Loyalty comes from a commitment to the organisation and identification of the group and mutual support. At the centre of it, you can have all the risk management frameworks. You can have all the staff looking over people’s shoulders. You can have the internal and external auditors. But, if you have a breakdown in trust and a breakdown in loyalty within the organisation, which is obviously part of what happens in pockets of all the banks, then you have the problems that came out of the Royal Commission.