After slashing NAB’s regional branches by a third Ross McEwan is bailing before a senate inquiry into the closures reports. Miniscule savings at the cost of trashing the bank’s reputation in a critical lending base.
What will his legacy be?

When Ross McEwan was named as the new chief executive of the National Australia Bank in July 2019, board chairman Phil Chronican said the bank, first and foremost, wanted “somebody who understood what it was our customers would expect of the bank in today’s era”.

He said also on the board’s wish list was someone who could restore the bank’s reputation after NAB took a major hit at the Banking Royal Commission in 2018.

At the press conference announcing the appointment, McEwan told reporters he was the man for the job, but some were skeptical he had the skills or the form.

One pointed out that his previous employer, the Royal Bank of Scotland, came last out of 16 in a Competition and Markets Authority survey of customer satisfaction among UK banks.

Asked where he wanted NAB to be in five years’ time, McEwan said “back up as the most trusted bank in the Australian marketplace” and “customer service delivery very, very strong”.

“We’ve got a long way to go here at NAB to get to that position, but it’s one we will work very hard on over the next three to five years to get into that position,” he said.

McEwan started in the chief executive role at the end of 2019.

Between the start of 2020 and now he has closed one regional NAB branch every fortnight on average, slashing a third of NAB’s regional network across Australia.

He’s also cut services in three regional branches to the point where they can no longer be classified as a branch under legislation.

Of the 121 NABs closed or downgraded, 58 were in towns that no longer have a major bank, the majority of which were left with no bank at all.

When the Senate inquiry into regional bank closures held its first hearing in Sale on March 2 last year, McEwan was invited to appear but chose not to attend.

In his place were two representatives from his executive team who were asked if they had discussed the senate committee’s request to pause closures during the inquiry with their CEO.

Executive General Manager, Retail, Krissie Jones confirmed she had.

“And the CEO has rejected that?” inquiry chairman Senator Matt Canavan asked.

“Our CEO is committed to making sure we are where our customers are,” she replied.

It was a nonsensical and, arguably, disrespectful response.

With a third less branches in regional Australia now than when McEwan joined NAB, the big question is what is happening to the customers from the branches that have been closed.

Krissie Jones told the Sale hearing “well over 90 per cent” stay with the bank but that is the extent of the information she provided.  (She said she would give further details to the inquiry but never did.)

Risk vs reward

Slashing 33 per cent of NAB’s regional network in four years and hoping customers will stick around has been a massive gamble by McEwan – particularly when the branches that are being closed are mostly in prime agricultural areas and for NAB, agriculture is big business.

According to the bank’s Regional and Agribusiness Horizons Report, released in July 2023, agribusiness deposits between March 2022 and March 2023 increased 8.1 per cent but nothing like the 20.6 per cent from the previous year despite the agricultural sector hitting a new record of $90 billion in production value.

Agricultural lending was also down on 2022 growth.

Of the 30 fastest growing urban areas in Australia listed in the report, NAB has closed 47 branches in 17 of the 25 regional locations.

Then there are agricultural centres like Laidley, a town of nearly 4000 people in the Lockyer Valley in Queensland – regarded as one of the top 10 most fertile farming areas in the world – that NAB left without a major bank in December 2022.

Or Maffra in Gippsland, a dairy farming centre with a population of more than 5000 and the site of one of Murray Goulburn Co-operative’s eight processing plants in Victoria, that was left bankless by NAB in May last year.

Clues as to whether mass closures on the scale McEwan has rolled out are impacting on NAB’s customer base are starting to appear.

Witness testimonies and submissions to the inquiry into regional bank closures indicate customers are changing banks, if there is an option left in their towns.

Warren Shire Council in NSW, for example, announced in August that following NAB’s decision to close its Warren, Gilgandra and Wellington branches it would be moving its accounts to the Commonwealth Bank.

While the Commonwealth has also been guilty of some scurrilous decisions on closures, it still has the most branches in regional Australia of the big four.

It also agreed to the senators’ request for a moratorium, implementing it in full (even though we will dispute their definition of regional), extended it to three years and reversed decisions to close the Junee and Bright branches.

Winning position

There is a tremendous opportunity here for the Commonwealth Bank if it has the foresight to see it and make the changes to its strategic direction that are needed to win back the confidence of regional Australians.

Thanks to NAB, it has been left as the last major bank standing in 31 regional towns, and the only bank in 13 of those.

That number is likely to grow before the start of April when McEwan steps down.

Because of his decisions to accelerate branch closures after the Regional Banking Taskforce report was released at the end of 2022, and then ignore a senate request to pause closures while the current inquiry was being held, few would dispute that NAB’s name is now mud across a large swathe of regional Australia. 

During the past 12 months, regional Australians have also seen McEwan caught out in parliament for misrepresenting visitation figures in branch closure impact statements that are now compulsory under the Banking Code of Practice (something he gave an undertaking to fix but which has never happened) and denying part of executive bonuses last year were linked to electricity savings from branch closures, despite the closures forcing thousands of customers on to the roads, generating emissions as they drive hours to find a NAB that is open.

And all this for what? The money saved by the closures McEwan has overseen since he started is miniscule. As Krissie Jones told senate committee at Sale, all staff are offered alternative jobs in the bank, so savings on wages, which make up one of the largest slices of annual running costs of a branch, are not even a factor.

High stakes for very little return.

This bloke could seriously go down in history as the CEO who single-handedly destroyed NAB’s reputation in regional Australia and lost its lucrative agricultural lending base – not to mention the spoils of growing regional migration – to its strongest competitor.

The winner will either be the Commonwealth Bank, if it can polish up its attitude and start investing in regional Australia by opening more branches than it is closing and returning to running its business as an essential service, or even a dark horse like the Regional Australia Bank (RAB), which has been winning hearts and custom in 13 towns where it has been left as the only bank by NAB.

A third possibility – as some senators on the bank closure inquiry have been strongly indicating – is a new government bank.

Whichever way, Ross McEwan will have handed it to them on a plate.

Quotes:

“You need to be very careful you don’t damage a bank, and particularly its relationship with customers because you want to eke out every quarter something better than the quarter before. I’m suggesting that is one of the attributes of how the industry might have got itself into some of the difficulties it has.”

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“You do need to have great customer service delivery in the business so that customers will advocate for you. We’ve got a long way to go here at NAB to get to that position, but it’s one we will work very hard on over the next three to five years to get into that position.”

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“As I have said many times and I will keep saying it, this needs to be a bank for customers and delivering to their needs.”

Ross McEwan
Media conference announcing appointment as CEO of NAB
19 July 2019 

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“NAB’s philosophy is to aim to provide every customer with access to a banker in their local community.”

Khan Horne
Executive – Regional and Agri, NAB Business and Private Banking
NAB Regional & Agribusiness Horizons Report 2023 

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“I would like to see the Commonwealth Bank have a substantially higher market share in regional communities where we are the only bank in town. So for other local councils, or small businesses, or farmers, homeowners in regional areas: if you value CBA supporting your communities, we would be delighted to serve you.”

Matt Comyn
Commonwealth Bank Chief Executive
Senate inquiry into regional bank closures, Canberra, September 2023

Branches closed or downgraded to cashless by Ross McEwan

This article appeared on The Regional on 9 February 2024.

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