- Replacement Shayne Elliott is ANZ's chief financial officer
- Smith's search for more revenue from Asia divided investors
Australia & New Zealand Banking Group Ltd.’s Chief Executive Officer Mike Smith will step down, ending an eight-year tenure that turned the bank into Australia’s most Asia-focused financial services group.
Chief Financial Officer Shayne Elliott, whose career includes two decades at Citigroup Inc., replaces Smith on Jan. 1, ANZ said Thursday. The 51-year-old takes the helm in a post-crisis era defined by tighter restrictions on banks. He also faces slower economic growth at home and in key Asian markets where the bank has built a presence, such as China.
Smith, 59, took charge just as the financial crisis began in late 2007. He set out to wean the bank off its domestic market and tap Asia’s growing pool of savings, buying Royal Bank of Scotland Group Plc’s units in the region and banking stakes in China.
With interest rates around the world plunging toward zero, rivals at home focused more on financing Australia’s property boom. Smith found himself battling new banking regulations that ate into the returns from an international network of minority stakes.
“We’re in a different regulatory environment and a different interest-rate environment, which makes cross-border business perhaps not as easy as it was,” said Brian Johnson, an analyst at CLSA Ltd. in Sydney. “The interest-rate environment probably makes trade finance not as good as it was.”
Since October 2007, when Smith took over, ANZ shares have lost about 7 percent. In the same period, National Australia Bank Ltd. stock is down 22 percent and Commonwealth Bank of Australia has jumped 31 percent. Westpac Banking Corp. has climbed 7 percent.
That period includes the worst fallout from the credit crisis, and since bottoming in February 2009, ANZ stock has more than doubled. The shares today climbed 1.9 percent to A$27.60 at 3:23 p.m. in Sydney, tracking a similar gain by the S&P/ASX 200 Index.
Smith, who was born in the U.K., joined ANZ from HSBC Holdings Plc, where he had been head of Asia. He is currently the longest-serving chief among the country’s four major banks.
His successor Elliott acknowledged he’s inheriting a bank in a changed economic climate.
“When the super-regional strategy was launched, the world was a very different place,” Elliott said on a conference call with analysts Thursday. “If you knew then what we know now, maybe we would have done it slightly differently.”
ANZ bank might reassess where it deploys capital, but “the fundamentals of our strategy won’t change,” he said.
“There will be a gradual wind back of the emphasis of the Asian strategy,” said Brett Le Mesurier, a Sydney-based analyst at APP Securities Ltd. “The focus will be more on getting the most out of the Australian and New Zealand businesses.”
ANZ resumed talks this year to sell its 39 percent stake in PT Bank Pan Indonesia after regulators introduced rules in 2013 requiring banks to subtract the entire value of overseas minority investments from Tier 1 capital.
Since the beginning of August, the Melbourne-based lender has raised A$3.2 billion ($2.2 billion) selling shares as it seeks to shore up capital. ANZ is also looking to sell its Esanda dealer finance business, which could add 20 basis points to the bank’s common-equity Tier 1 capital, Elliott said in May.
Elliott’s appointment followed “a detailed review of external and internal candidates,” ANZ Chairman David Gonski said in a statement. “Shayne’s international banking and financial experience, together with his background in Australia and New Zealand, makes him the right person to lead ANZ in a challenging global environment.”
Smith has a reputation as one of Australia’s most outspoken business leaders. He was a vocal critic of a “bank-bashing” culture among Australian lawmakers. And he once said the trouble with banking regulators is they have no natural predators.
In 2010, he compared then-shadow Australian Treasurer Joe Hockey to Venezuela’s socialist leader, Hugo Chavez, over plans for an inquiry into banking competition. The same year, he was quoted calling upon fellow CEOs to stand their ground when “some spotty analyst who couldn’t run a two-ticket raffle is telling you how to run your organization.”
Speaking on the conference call Thursday, Smith said: “I say what I think.”