Thursday, November 13, 2014

Gail Kelly retires as Westpac boss. So who will be banking's next female titan?

Gail Kelly's decision to retire in February next year is not exactly a surprise, although this morning's announcement was unexpected.

Listen to the breaking news on ABC NewsRadio from this morning.

For the past two years, the pressure had been growing and Mrs Kelly has managed to fob off the unwelcome question when it arose at various appearances and briefings.

Mrs Kelly's responses have been typically diplomatic and predictable, although she appeared particularly unimpressed when I asked for an update on her succession strategy last year.

It was a matter for the Westpac board, Mrs Kelly said, and while the multi-billion dollar profits continued to roll, Australia's highest paid banking boss sent that message that she was going nowhere.

That was until this morning when the announcement hit two hours before the stock exchange opened.

In the leadup to the official news that Mrs Kelly will at last retire, the positioning by her perceived successors was going on behind the scenes and in public.

The winner of the battle for one of banking's crowns is Brian Hartzer, Westpac's current chief of retail and business banking.

The vanquished is Rob Whitfield, Westpac's head of institutional banking, who while highly respected was seen as a long shot for the CEO gig.

Since coming on board in 2012, Mr Hartzer - well liked, urbane and quick witted - had ramped up public appearances but also had a profile at regular briefings Westpac holds for investors, analysts and the media.

A former ANZ senior executive, Mr Hartzer was seen to have been "courageous" in taking up a senior role at The Royal Bank of Scotland in 2009 at the height of the global financial crisis.

The Royal Bank of Scotland is still majority owned by the British taxpayer.

Having survived that, Brian Hartzer has seized the prize with a starting salary of $5.36 million, comprising a base rate and short term incentives. Another $2.5 million awaits if he meets requirements to cash in long term incentives.

That's about half Gail Kelly's $12.8 million for the past year, but with performance in his DNA, Brian Hartzer is well on the way on the assumption that he is not about to take a hospital pass.

The timing of this morning's announcement was perfect with a quiet session on global markets paving the way for maximum exposure about Mrs Kelly's success.

The news also follows Mrs Kelly's final full year profit as Westpac boss announced last week - up 8 percent to $7.6 billion.

Westpac would have been reluctant to overshadow another stellar result with the one of banking’s most anticipated announcements.

So what is Gail Kelly's legacy since joining Westpac in 2008?

Surviving and prospering through the global financial crisis and growing Westpac market value from $50 billion to today's $103 billion is surely one.

But she is in good company with other Australian banking bosses, who thanks the guarantees by the Australian taxpayer, have happy shareholders.

Delivering a merger between Westpac and St George Bank - having come to Westpac after running St George - is another.

The merger was controversial at the time amid concerns from the government at the time that more banks - rather than fewer - were needed.

The then Treasurer Wayne Swan approved the merger deal but not without strict controls on how Westpac would maintain St George shopfronts and importantly jobs.

Six years after that merger, the jury is still out on whether the Westpac-St George merger was actually good for Australian banking and whether in reality it provided more opportunities for Australian consumers to walk away if they didn't like their deal.

But today, it's all about Gail Kelly as Westpac's media machine ramps up to rightly portray her as one of Australia's most successful and savvy business operators – and a banking superstar.

With her replacement a man in Brian Hartzer, the question is who will step up to replace Gail Kelly as a female titan in Australian banking?

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