WEBVTT - Nunogeddon is coming for Australian banking

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<v Speaker 1>From The Australian. Here's what's on the front I'm Claire Harvey.

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<v Speaker 1>It's Thursday, September eleventh, twenty twenty five. Opposition leader Susan

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<v Speaker 1>Lee has sacked firebrand Senator Jacinta numbm for Price from

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<v Speaker 1>the front bench after Price refused to apologize for remarks

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<v Speaker 1>about the Indian community. Price says she has legitimate concerns

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<v Speaker 1>about the scale of Labour's migration intake. Lee says Price

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<v Speaker 1>fails the test for a position of responsibility and can't

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<v Speaker 1>continue if she won't back her leader. HERMAS leaders will

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<v Speaker 1>never be safe. That's Israel's message after it made an

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<v Speaker 1>airstrike against Hamas leadership in Qatar, triggering a brawl with

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<v Speaker 1>the White House. Donald Trump slapped down Benjaminette Nia who

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<v Speaker 1>over the strike, which came as Qatar was hosting ceasefine

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<v Speaker 1>negotiations aimed at getting Israeli hostages home. He says he

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<v Speaker 1>will not allow immunity for terrorists anywhere in the world.

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<v Speaker 1>Those stories alive right now at the Australian dot com

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<v Speaker 1>dot a U. If you work in banking, watch out.

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<v Speaker 1>Thousands of jobs are being cut as bosses prepare for

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<v Speaker 1>a leaner future and shred projects that aren't working today.

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<v Speaker 1>The man swinging the axe at Australian banking's biggest employer,

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<v Speaker 1>an Z, they call him Nunageddon.

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<v Speaker 2>Oh Vily, this is a very very special moment to me.

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<v Speaker 2>It really means a lot.

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<v Speaker 1>Nunomatos is an adventurous fifty seven year old ocean swimmer

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<v Speaker 1>who's just moved his family to Australia and when he

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<v Speaker 1>was announced as the incoming chief executive of A and

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<v Speaker 1>Z Bank in twenty twenty four, you could feel the

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<v Speaker 1>energy radiating through his warm Juguese accent.

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<v Speaker 2>My grandfather was an Indian and he actually in his thirties,

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<v Speaker 2>he moved to Africa where he met my grandmother. She

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<v Speaker 2>came from Portugal. I met my wife in Perusius, Pruvian

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<v Speaker 2>and we have two boys. One was born in Spain,

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<v Speaker 2>the other was born in Brazil. And actually at home

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<v Speaker 2>we always speak three languages every single day, and well

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<v Speaker 2>I can't forget our two dogs, one from the US

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<v Speaker 2>and the other from Mexico. We are kind of united

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<v Speaker 2>nations at home.

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<v Speaker 1>He made his career from his start straight out of

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<v Speaker 1>UNI at Portugal Central Bank to a globe trotting banking

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<v Speaker 1>career sound like one long, fabulous dinner party.

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<v Speaker 2>After living in nine markets from Asia to the Americas,

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<v Speaker 2>Australia feels a perfect country to live, to be happy

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<v Speaker 2>and to develop new friends and new professional connections.

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<v Speaker 1>By the time his face were under the desk vacated

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<v Speaker 1>by former boss Shane Elliot, Martos was sounding a little

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<v Speaker 1>more weary.

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<v Speaker 2>We have to run faster and at the same time

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<v Speaker 2>with more excellence operating at this full potential.

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<v Speaker 1>Here's what that meant.

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<v Speaker 2>The A and Z will cut three thousand, five hundred

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<v Speaker 2>of its forty three thousand staff plus another thousand contractors.

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<v Speaker 2>The unions have gone ballistic, staggering, a catastrophic announcement for

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<v Speaker 2>so many staff who work here within the ANZ banking organization.

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<v Speaker 1>And suddenly he has a new nickname, Nunigeddin. Eric Johnston

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<v Speaker 1>is an associate editor with The Australian.

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<v Speaker 3>The mood has changed to azt ain Z was known

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<v Speaker 3>as a really warm and friendly and fuzzy bank. For example,

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<v Speaker 3>they even had meditation training courses many years ago under

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<v Speaker 3>a former chief executive, John McFarland. They had a more

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<v Speaker 3>international perspective, but they were a very warm, friendly institution

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<v Speaker 3>and that sort of allowed a lot of flexibility for

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<v Speaker 3>their workforce. And what we've seen is a sudden shift,

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<v Speaker 3>and now that shift means people are coming back to

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<v Speaker 3>the office. Last week I sat down and went down

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<v Speaker 3>to the Docklands headquarters and just worked out of there

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<v Speaker 3>for a few mornings. No one asked a question, no

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<v Speaker 3>one knew who I was.

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<v Speaker 1>Had anyone invited you to come with your laptop.

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<v Speaker 3>No, no, But they do great coffee, fantastic coffee, and

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<v Speaker 3>you just sort of park the corner there and look,

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<v Speaker 3>people were there, people were working, People were really well dressed.

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<v Speaker 3>And that's one of the things when the new chief

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<v Speaker 3>executive came in, he had complained that Australians didn't look

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<v Speaker 3>like bankers because people were really casual, ave dressing down

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<v Speaker 3>and so on. So suddenly I'm noticing a lot more ties,

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<v Speaker 3>a lot more suits are on. People were back, People

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<v Speaker 3>were in the office and they knew. There was an

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<v Speaker 3>anticipation in the air that something big was going to happen,

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<v Speaker 3>and it did.

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<v Speaker 1>Now on paper, this bank is doing quite well. It

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<v Speaker 1>made six billion dollars cash profit. Reported that this year.

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<v Speaker 1>Nuno Martos is on a two and a half million

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<v Speaker 1>dollar salary. With a two and a half million dollar bonus,

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<v Speaker 1>which I guess he might be achieving if he cuts

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<v Speaker 1>these costs. What's going wrong at ain.

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<v Speaker 3>Z, Well, just on the salary, so that that will

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<v Speaker 3>escalate to up to ten million dollars at its maximum

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<v Speaker 3>potential if all the long term benchmarks are achieved. That's

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<v Speaker 3>the way it's structured. But it is a big number,

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<v Speaker 3>six billion dollars. Wow, look at that pure profit. Certainly

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<v Speaker 3>big number becomes less impressive when we start thinking, Okay

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<v Speaker 3>and z's asset base is about six hundred billion dollars.

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<v Speaker 3>It's kind of reasonable, but banks generally can do a

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<v Speaker 3>bit better. So Comewealth Bank is a really well run

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<v Speaker 3>bank and it generally returns about thirteen and a half

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<v Speaker 3>to fourteen percent. So you can see you can see

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<v Speaker 3>the gap there. Nuno Martos. He's coming from HSBC, a

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<v Speaker 3>big global bank, and he's seen the immediate problem. A

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<v Speaker 3>and Z's got a list its shareholder returns, and this

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<v Speaker 3>is one way that he wants to go about doing it.

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<v Speaker 1>There's a lot of talk about big changes to something

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<v Speaker 1>called A and Z plus What is that and what

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<v Speaker 1>would that mean?

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<v Speaker 3>So what it is for the last six years under

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<v Speaker 3>the former management, a Z has been building what it

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<v Speaker 3>calls at the front end, a new app called ain

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<v Speaker 3>Z Plus. It's been promised for ages and talking five

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<v Speaker 3>or six years in the planning. So far they've spent

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<v Speaker 3>one point five billion dollars on building. Effectively an app

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<v Speaker 3>that they've been promising is going to be rolled out.

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<v Speaker 3>It's starting to be rolled out to some customers. They're

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<v Speaker 3>promising in the world your hoold ten minute mortgages. It

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<v Speaker 3>will do your dishes, it'll do everything, but it's yet

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<v Speaker 3>to be delivered. The upside for ain Z though, it

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<v Speaker 3>allows processes to be done much more quickly and efficiently,

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<v Speaker 3>and I'll betting on with less people as well. That's

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<v Speaker 3>yet to eventuate. Nuno Martos has come in and looked

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<v Speaker 3>at this and he's thought of straightaway, why has this

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<v Speaker 3>app not been delivered? Why are we still building this thing.

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<v Speaker 3>There's a lot of mission creep in this app. So

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<v Speaker 3>he wants to take control of that. He just wants

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<v Speaker 3>to pair it back and just get it in people's

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<v Speaker 3>hands and get it delivered. And so by this time

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<v Speaker 3>next year, the expectation is it will start to be

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<v Speaker 3>the main app. The aims and customers use.

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<v Speaker 1>We know the banks watch each other very closely. They

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<v Speaker 1>all put rates up within hours of one another, all

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<v Speaker 1>down depending on which way things are going. We've already

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<v Speaker 1>seen nab An ounce some job cuts. Would you expect

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<v Speaker 1>people in banking to be now nervous that all the

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<v Speaker 1>banks are going to look at whether they can bring

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<v Speaker 1>their whipfulces down.

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<v Speaker 3>I think what this does it gives others cover to

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<v Speaker 3>also do that. Look, Westpac has in recent years cut

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<v Speaker 3>about seventeen hundred rolls, but he didn't come out with

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<v Speaker 3>a big announcement. It just said, look, we want to

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<v Speaker 3>target a lower cost base. Come off bank again. You'll

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<v Speaker 3>hear every now and then. They might cut jobs, but

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<v Speaker 3>not in a whole cell way. And there's certainly under

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<v Speaker 3>no pressure to slash and burn because again they run

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<v Speaker 3>quite well. But it does give some of the others

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<v Speaker 3>a little bit of cover. It also gives Corporate Australia

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<v Speaker 3>cover to think, you know, if I come out tomorrow

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<v Speaker 3>and cut a thousand jobs, I'm not going to look

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<v Speaker 3>like the bad guy. That guy down the road at

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<v Speaker 3>AMS he's still looking pretty terrible. So that's what the

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<v Speaker 3>message is. But really, interestingly, what's happened is that since

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<v Speaker 3>the COVID pandemic, there hasn't really been wholesale job cuts.

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<v Speaker 3>So this was a real big wake up call. And

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<v Speaker 3>all large corporates have actually been hoarding labor because they're

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<v Speaker 3>so scared of a tight labor market, and when the

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<v Speaker 3>economy does go into an upswing, they'll have nobody to

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<v Speaker 3>be able to fund that growth or deliver into that growth.

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<v Speaker 3>So that's what we've heard of this term called jobs hoarding.

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<v Speaker 3>So this is a real change that mindset.

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<v Speaker 1>Coming up the long road down Under for Nuno Martos

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<v Speaker 1>and what other banking workers should expect. At the top

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<v Speaker 1>of this episode, we heard what Nuno Martos sounded like

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<v Speaker 1>when he got this job. He'd gone for a couple

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<v Speaker 1>of other big jobs. Reportedly he wanted the top job

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<v Speaker 1>at HSBC, didn't get that his name was murdered to

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<v Speaker 1>be the boss of Westpac. That didn't happen, got this

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<v Speaker 1>job at A and Z and then in his introduction

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<v Speaker 1>interview he spoke very warmly about moving to Australia with

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<v Speaker 1>his dogs and his kids. I feel like if he

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<v Speaker 1>knew he was going to be coming in here and

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<v Speaker 1>sacking a lot of people, he would have been less

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<v Speaker 1>effusive about the big opportunity for himself and his family.

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<v Speaker 1>He might have been a little bit more sensitive about that.

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<v Speaker 1>So therefore has he looked under the hood and found

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<v Speaker 1>some things that have shocked him.

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<v Speaker 3>Look, I think he knew exactly what he was going

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<v Speaker 3>to do when he signed up. And an interesting background

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<v Speaker 3>Portuguese banker worked at a Spanish for many years called Santander,

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<v Speaker 3>then moved across to HSBC, another big global bank, and

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<v Speaker 3>he was an executive on the rise at HSBC, and

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<v Speaker 3>they put him in what was probably their biggest problem

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<v Speaker 3>child business, which was Mexico. So he ran Mexico for

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<v Speaker 3>HSBC for many years, and that was after it had

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<v Speaker 3>a number of regulatory skirmishes, particularly around money laundering, and

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<v Speaker 3>you can imagine the complexity of that. Now. He really

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<v Speaker 3>got onto the radar of HSBC management there because first

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<v Speaker 3>of all, cutting costs, winning back the trust of regulators,

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<v Speaker 3>and while growing the business with customers and look, that

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<v Speaker 3>just ticked all the boxes for HSBC. He was in

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<v Speaker 3>the running to get the top job and just narrowly

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<v Speaker 3>missed out. At the time, Bloomberg described him as something

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<v Speaker 3>along the lines as the most eligible CEO in the world.

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<v Speaker 3>So was someone who was just had to It was

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<v Speaker 3>just a matter of someone reaching out coming to Rains.

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<v Speaker 3>He knew what needed to be done, reputation for cutting

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<v Speaker 3>costs and this is his playbook exactly.

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<v Speaker 1>So what's next.

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<v Speaker 3>What we don't know is where the jobs are going

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<v Speaker 3>to be cut exactly. We do suspect there's going to

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<v Speaker 3>be in the retail bank and we do suspect a

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<v Speaker 3>bit of our business banking. He's going to run up

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<v Speaker 3>to investors in the middle of next month, October, and

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<v Speaker 3>this is where he'll present his strategy. This is how

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<v Speaker 3>we're going to go forward. He's expected to put a

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<v Speaker 3>line in the ground saying we want to achieve these

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<v Speaker 3>kind of shareholder returns and we want to achieve this.

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<v Speaker 3>And in banking world it's called a cost to income

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<v Speaker 3>ratio and it is what it sounds like. It's about

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<v Speaker 3>your costs relative to the revenue you do. So we

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<v Speaker 3>expect him to put out a number to try and

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<v Speaker 3>target a lower cost to income ratio. Australian banks have

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<v Speaker 3>a terrible track record of cutting costs. They have a

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<v Speaker 3>terrible track record of really in these big change programs.

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<v Speaker 3>Sure change happens, but then they're very short term, like

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<v Speaker 3>banks get into their old ways. Regulation is a really

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<v Speaker 3>big deal in the Australian bank market. That's where a

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<v Speaker 3>lot of the baked in costs are from as well,

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<v Speaker 3>So he's going to confront some of these challenges as well,

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<v Speaker 3>so running the bank and running it well. At the

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<v Speaker 3>same time his rival banks CBA, National Australia Bank in Westpac,

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<v Speaker 3>they are just going gangbusters on business banking, so they're

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<v Speaker 3>throwing everything at that while he's taking things out of it.

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<v Speaker 3>So that's going to be an interesting battle to watch.

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<v Speaker 1>Eric Johnston is an associate editor with be Australian. You

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<v Speaker 1>can read his reporting from the lobby of Vanz's Dockland's

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<v Speaker 1>headquarters and all the best business news right now at

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<v Speaker 1>the Australian dot Com dot a