Powered by MOMENTUM MEDIA
subscribe to our newsletter

‘Obsession with capital’ is wrong: bank chief

The CEO of a major bank believes the current hype over bank capital overlooks the real “hot issue” that regulators will be increasingly targeting.

In an interview on ANZ Bluenotes, outgoing ANZ chief executive Mike Smith said “this obsession with capital as being the only defining measure for a strength of a bank isn't right”.

“Yes, you have to have a strong balance sheet – but that includes your liquidity, it includes your credit quality and capital of course is part of that,” Mr Smith said.

“But it's the people who manage it who most affect the bank and whether or not it's going to be strong or not.

“It's the behaviours of the people who actually work for the organisation and therefore that values-led culture is absolutely critical. You'll see regulators now really turning the tap up on this and it's going to become a more and more hot issue.”

Advertisement
Advertisement

Mr Smith said that the problems experienced during the GFC in Europe, the UK and US were around organisations that had lost touch with their culture and had lost touch with what was ethical behaviour within those organisations. 

“There were only a handful of those frankly but they tarred the whole industry. We have to live with that and we have to try and make it better all the time,” he said.

Mr Smith will step down as CEO on 1 January 2016 after eight years in the role, to be replaced by current CFO Shayne Elliott.

Last month the major bank completed a share purchase plan, raising approximately $720 million of CET1 capital.

‘Obsession with capital’ is wrong: bank chief

PROMOTED CONTENT


>In an interview on ANZ Bluenotes, outgoing ANZ chief executive Mike Smith said “this obsession with capital as being the only defining measure for a strength of a bank isn't right”.

“Yes, you have to have a strong balance sheet – but that includes your liquidity, it includes your credit quality and capital of course is part of that,” Mr Smith said.

“But it's the people who manage it who most affect the bank and whether or not it's going to be strong or not.

“It's the behaviours of the people who actually work for the organisation and therefore that values-led culture is absolutely critical. You'll see regulators now really turning the tap up on this and it's going to become a more and more hot issue.”

Mr Smith said that the problems experienced during the GFC in Europe, the UK and US were around organisations that had lost touch with their culture and had lost touch with what was ethical behaviour within those organisations. 

“There were only a handful of those frankly but they tarred the whole industry. We have to live with that and we have to try and make it better all the time,” he said.

Mr Smith will step down as CEO on 1 January 2016 after eight years in the role, to be replaced by current CFO Shayne Elliott.

Last month the major bank completed a share purchase plan, raising approximately $720 million of CET1 capital.

‘Obsession with capital’ is wrong: bank chief
mortgagebusiness

Latest News

Reverse mortgage lenders have accessed a small fraction of the potential retiree housing market in Australia, according to Deloitte. ...

Pepper Money has priced its second I-Prime deal for the year, upsizing the figure to $850 million. ...

The LMI provider has announced a new CFO following the resignation of its current CFO, effective 24 September. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.