The interview was conducted by BlueNotes Managing Editor Andrew Cornell, ANZ’s digital publication for news, opinion and insight and can be viewed at www.bluenotes.anz.com
Andrew Cornell: Hi Shayne and welcome to BlueNotes, thanks for your time. You’ve made some significant announcements this morning about the Wealth businesses, moving them back towards the customers and businesses where they’re aligned there. Where do you see Wealth and insurance businesses fitting into major banks today?
Shayne Elliott: Well, for me it’s really simple – we have an obligation to provide access for our customers, to both insurance products to protect the things that they love and to save for their future. That’s our responsibility so we need to have that front and centre in all the ways that customers interact with us – whether that’s in a branch, whether that’s through private banking relationships or whether that’s online. So these changes are really designed just to cement that relationship even closer at the front-end.
Andrew Cornell: In the detail of the announcement that you’ve made today, you talk about bringing the business in more closely to the other operations in New Zealand. Is it a similar model for Asia as well?
Shayne Elliott: Absolutely. The key design principle here is really to bring the Wealth business as close as possible to our customers, and that inevitably means to marry it with our retail businesses. So we’re doing that in New Zealand, we’re doing that in Australia and absolutely we’re going to do that in Asia. You know the industry around both insurance and investments is a fast evolving one. There’s a lot more regulation happening there, there’s a lot more capital intensity, there’s a lot more compliance issues to think about. And that really causes us to really question the operating model and the way that we run that business. To say how do we generate the right value for customers but at the same time generate value for our shareholders? So there’s a lot of work that needs to be done there. We’re actually pretty fortunate, our business starts in a pretty good starting point – we’ve got decent returns, we’ve got good growth, we’ve got a strong franchise but we know we can do better and I just want to be ahead of the game rather than responding to it.
Andrew Cornell: Because there is a sense that these bancassurance models that started 10, 15, 20 years ago now haven’t delivered for bank owners or for bank shareholders, but you don’t see it that way?
Shayne Elliott: No, see our business has absolutely delivered for shareholders. I’ve said we’ve got a reasonable amount of our capital dedicated to it, but it’s generated and improved it’s returns over time so that’s great. It’s strengthened our market position so more and more customers are choosing ANZ for their solutions. So we’re getting value out of it. The question for us is not that, as I said, it’s really to looking ahead and saying there are all these changes coming, some about regulation and some about just competition in the marketplace and we need to be ready for that. So that says it’s time to go and have a look and just see if we can be better - we know we can and we’ve got a lot options in how do that and I want the team to come back to me to make some recommendations.
Andrew Cornell: In essence, what we’re talking about here is simplifying the business operationally but also in terms of the capital that’s used as well. Is there a big story here for shareholder value as well?
Shayne Elliott: When I think about the capital that we allocate across the group today we’ve got about 40% of our capital as a group sitting in our Retail and Commercial businesses which are terrific; we’ve got about 50% sitting in our Institutional and Asia-Pacific businesses and it’s about only 10% that sits in Wealth. So we want to really maximise and liberate that 10% of our capital in Wealth and do the best that we can with it. It is going to be material in the terms of the impact on the Wealth business but for shareholders, given that it’s only 10%, it will be a good thing but it’s unlikely that it’s going to be a dramatic outcome for shareholders.
Andrew Cornell: And is there a sense that it wasn’t delivering enough value in the past?
Shayne Elliott: No, I actually think having created this Wealth division has generated a lot of value for shareholders and for our customers – it’s been a good thing. Joyce and the team have really done a lot of very positive things in terms of growing our market presence, growing our market share, launching innovative products – that’s terrific and we want all of those things to continue. This is really just a recognition that the world is changing ahead and now we’re at a different stage of maturity and it’s kind of the time for the next stage in its evolution.
Andrew Cornell: You’ve now made a series of announcements, both structural changes and some very big appointments, leaving aside the CFO appointment which is yet to come, should we expect more of these big announcements?
Shayne Elliott: I think we’re largely done in that. We’re now sitting in the structure that I want in terms of the way we think about the business. We’ve got our Retail and Commercial businesses set up with Fred, Maile and David. We’ve got our Institutional business set up with Mark Whelan and with strong support with Farhan. And now we’ve got a path for Wealth in terms of thinking about how we’re going to run that business in the future. So this is the team, this is the group that we want and our focus now is really around execution.
Andrew Cornell: Well look, thanks very much again for your time with BlueNotes, Shayne.
Shayne Elliott: Thank you.