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The board announced on Monday (28 November) that its former managing director and CEO, George Frazis, would depart the bank “effective immediately”, after it made the decision on Sunday (27 November) to search for a new successor.
“I know this leadership change would have come as a surprise to many,” Patrick Allaway said during the bank’s 2022 annual general meeting (AGM) on Tuesday (6 December).
Mr Allaway recognised the contribution Mr Frazis had made over his three-year tenure. But, he said that the bank had “reached a conclusion” that it needed a “different capability” and “leadership style” to build a more resilient bank.
“We recognise the immediate departure of a CEO and the associated uncertainty is not ideal,” Mr Allaway said.
Mr Frazis joined BOQ in September 2019 and was part of the acquisition and integration of ME Bank as well as steering the bank’s technology transformation and overseeing a return to growth in all key channels across the bank, Mr Allaway said.
Despite this, Mr Allaway said it would be “sub-optimal and destabilising for George to continue in the CEO role knowing he did not have the ongoing support of the Board,” while the search for a successor was underway.
“The board also felt it was important, given the need for stability, to allow the senior executive team to focus on continuing to deliver on our plan, support the wider BOQ team, and keep their attention on what is best for our customers and shareholders,” Mr Allaway said.
During question time, one shareholder raised concerns over the timing a grant of securities was put forward to shareholders while the board was “aware of the audits dissatisfaction with the CEO”.
“It seems to me inconceivable and inappropriate that a board … would at the same time recommend to shareholders that he’d be great at those securities,” a shareholder asked Mr Allaway during the AGM.
Mr Allaway responded that the “board takes very seriously its decisions about the grants of securities to our executives”, and takes performance into consideration for those.
“The board had not formed a view, it only formed the view of lost confidence in the CEO last Sunday [27 November],” Mr Allaway said.
“Clearly there are a number of considerations that we thought about … and once that decision was made, it was entirely appropriate to do what we did.”
BOQ searches for new head
BOQ is now actively looking to appoint a new CEO “as a matter of priority”, Mr Allaway said.
“We anticipate the executive search and evaluation process, and commencement of the new managing director and CEO may take up to nine months,” Mr Allaway said.
Mr Allaway will step into the role as CEO, while its non-executive director, Karen Penrose, will be the lead independent director during this period.
“As executive chair I will focus on supervising the management of the business while our executive team remain focussed on execution of our strategic priorities and running the business,” Mr Allaway said.
“I recognise the increased time commitment required to undertake an Executive Chair role, and accordingly I have taken leave of absence from the Dexus and Allianz Boards during this interim period.
"We have a strong team led by our senior executive team who is well skilled and seasoned bankers and passionate about BOQ."
Mr Allaway said his appointment as executive chair is of an “interim nature to retain stability” and plans to return to board as soon as a new CEO commences.
“Our ambitious vision and strategy for BOQ remains unchanged. We are in a strong financial position and by strengthening our operational resilience and risk culture we will further strengthen our ability to transform in a sustainable manner,” Mr Allaway said.
The bank is committed to delivering its strategic plan by improving the experience for its customers and employees “by building a digital and data led scalable bank”, he said.
“This transformation is critical not only for our competitiveness, but also to uplift our risk control environment by moving off multiple complex legacy systems and reducing our reliance on manual processes,” Mr Allaway said.
“The digital bank will provide a compelling value proposition, increasing our return on equity and building shareholder value.”
As part of the bank’s plan, it seeks to build a “simpler and more resilient bank with an uplift in our risk culture, frameworks, processes and controls”, Mr Allaway said.
[Related: Head of BOQ exits]