Meet the executives next in line to run the big banks

The next week will be a nerve-wracking time for ANZ chief executive Shayne Elliott as he waits to find out whether the competition regulator has given its blessing to his audacious $4.9 billion bid for Suncorp’s banking business.

But Sullivan would also be conscious that although he may boast an impressive record in retail banking, bank boards tend to look inside their own executive ranks when it comes to selecting their next leader. Seasoned bank directors point out that all the candidates for a bank chief executive role must undergo a gruelling selection process. Candidates undergo a series of interviews with smaller groups of bank directors, before being required to make a formal presentation to the entire board.

To date, banks have been able to use rapid growth in their home loan books to offset the impact of skinnier margins. The willingness of households to saddle themselves with huge amounts of debt, combined with soaring house prices, has made it relatively easy for banks to expand their mortgage lending. But, the top banker points out that this process is nearing its end.

Slowing credit growth translates into pressure on bank earnings, as net interest margins – the difference between how much banks earn on their loans and their funding costs – get squeezed. “You need to focus on competing effectively,” says EY’s Nixon. “You have to look at where you can gain operational efficiencies as well as looking at where you can take out costs ... you have to be very focused on the efficiency, profitability angle.”

Nixon agrees. “A big question for any new chief executive will be where is the best place to invest capital, not only when it comes to searching for growth, but also in handling competitive pressures and streamlining costs in an inflationary environment.”The next generation of bank bosses will also need to come up with strategies to fend off even more aggressive competition from non-bank competitors, particularly the big tech companies, in the payments system.

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