CBA Official Resigns, Moves to RBS as Chief Executive
In a brief break from the Reserve Bank of Australia (RBA) overnight cash rate cut of 50 basis points, Commonwealth Bank of Australia (CBA) was again in the headlines not for the less than 50 basis points cut it made on variable mortgage rates but for the resignation of one of the lender's key officials.
Ross McEwan, group retail banking services head of CBA, resigned to become chief executive of the Royal Bank of Scotland. He will leave CBA later this year and head RBS in London, CBA announced on Monday.
Mr McEwan will replace another former Australian banker, Brian Hartzer, who left ANZ Bank in 2009 and moved to RBS. Mr Hartzer will return to Australia in summer to take a senior post at Westpac.
RBS's preference for Australian bankers is apparent because of the resilience of the Aussie retail banking market which was hardly dented by the global financial crisis and has a reputation for good customer service, RBS Chief Executive Stephen Hester told Financial Times.
Mr Hartzer came to RBS during a management revamp after the British lender was bailed out by the government. In the past three years, he brought to RBS several Australian bankers to help improve customer service in RBS.
Mr McEwan is actually from New Zealand who was among the candidates to head CBA in 2011 when former Chief Executive Ralf Norris left, but the post went to Ian Narev, who used to head CBA's business banking.
Mr Narev said that Mr McEwan has been a highly valued member of CBA's executive committee for the past five years. He said Mr McEwan's replacement will be announced later after a global search for the latter's successor.
Like other Australian banks, CBA is struggling with a sharp decline in mortgages, which led the lender to pass on partly the 50-basis points overnight cash rate reduction made by the Australian central bank last week. Because the big 4 had chosen to even increase their variable mortgage interest rates during the first few months of 2012 while the RBA kept the rates at 4.25 per cent until April, satisfaction ratings of the banks suffered.
The banks, which partly cut rates last week and reported 10-digit net profits for the first half of the financial year, insisted on keeping part of the RBA rate reduction to offset their higher cost sourced from wholesale funding overseas. Westpac, however, indicated that it will shift its focus to deposit banking from wholesale funding to address the borrower clamor for lower mortgage rates.
