Mike Smith is the banker other bankers want to be. Smart, strategic and to the point: the ANZ chief’s got the confidence to tell customers, the government and the Reserve Bank how things should be done.
His bank’s not the largest financial institution in the country, but Smith packs a harder hitting punch than his rivals at the Commonwealth Bank, NAB and Westpac.
Smith’s driving the most ambitious regional expansion of any of the big four bankers, and was the first to tell RBA governor Glenn Stevens his bank would no longer be beholden to the RBA’s interest rate timetable. That’s why he’s the only banker on our Business Bosses list.
“Somebody had to break the nexus,” Smith tells The Power Index on his December decision to break free from the RBA.
“Somebody had to depoliticise the issue and then work on the education process.”
It’s no stretch to call Smith the James Bond of the sector, and not just because of his soft spot for Aston Martins. He may not resemble Ian Fleming’s creation, but he does boast 007’s scars: Smith took a bullet to the thigh while heading up HSBC in Argentina during the country’s economic crisis in 2001.
The Brit with the blonde comb-over, cheeky grin and larger than life appearance revels in his outsider image, informing The Power Index that he and his fellow big four CEOs “don’t have much to do with each other”.
“On big issues, we can’t agree what day of the week it is,” he adds.
Upon taking over from John McFarlane in 2007, Smith quickly showed his teeth with an aggressive approach to management to fix some of the bank’s internal challenges head on.
Earlier this year, he and his Australia country CEO Philip Chronican announced an axing of 1000 employees locally, and continuing a freeze on most senior executive salaries.
He’s earned respect but not necessarily any friends. “Is he liked?” one watcher tells The Power Index, “Probably not. But for the bank, that’s not necessarily a bad thing”.
That’s especially true when your strategy is to have 25 to 30% of the bank’s group profit generated outside of Australia and New Zealand by 2017.
So far, that’s meant shifting a domestically focused, Melbourne-centric bank to one that can take on emerging markets. Add to that reskilling the business, employing “Asia specialists” and chasing well-priced acquisitions, and the task requires a CEO with eyes on nothing but the long-term prize.
“It’s proven more difficult than I thought,” Smith says. Indeed, ANZ’s lost good talent along the way, but Smith’s ok with that. After all, driving the bank’s “super regional strategy” was the reason he took the ANZ post in the first place.
Smith boasts the rare banking trait of patience. And it’s this that’s helped ANZ in waiting for the perfect opportunities to pounce where other banks are faltering in Asia. ANZ’s 2009 purchase of selected Asia-based assets of the Royal Bank of Scotland gave them a fighting head start. Smith wants similar acquisitions and is now in a good position to get them, having previously noted that stresses on European banks mean they “will probably have to sell their family silver, which is the Asian assets”.
Smith’s made no secret of wanting to focus on the long-term opportunities and to avoid “short-term point scoring”. He’s got a reputation of being the real-deal “career banker” whose first love will always be running a bank.
We’re pretty sure Mike Smith won’t be offended by the rap. He’s a man who likes to fix things, and with thirty years in banking — including HSBC in Argentina, the “Stalingrad” of the banking sector, as well as Hong Kong, the Solomon Islands and the Middle East — he’s got the record to show he can do just that.
But all that means Smith’s not a people’s banker. A key challenge for him, and his rivals, is to tackle the bank bashing that occurs locally and to convince the average punter that hacking interest rates does not benefit everyone — especially ANZ’s three million customers with deposits, (the bank’s variably mortgage customer base is closer to 800,000).
Still, it’s not easy for Smith to relate to the mums and dads managing a mortgage. Paid a total remuneration package of around $10 million in 2011, the man’s got expensive tastes. He lives with his wife and children in an expensive Toorak mansion. He recently took 100 staff and their guests on a on a five-day $1.75 million cruise, and still has that penchant for fine, fast cars.
“I don’t think we’ve managed it [education] particularly well. I’m part of that problem as well,” Smith says. “I don’t think we’ve tried to get our voice across. But perhaps we’re talking to an audience we assume understands much more than we think.”
When we ask if he empathises with his banking colleagues over in the eurozone, we wonder if he’d personally like to get stuck in and see how he could curtail the bleeding himself.
“I think that there is no doubt that certain CEOs are better in times of crisis than other,” he tells us, after expressing sympathy for those affected. He believes plenty of woes have been self-inflicted but that increased global regulation is contributing to the pain: “the banking system in Europe has not been treated terrible well”.
So how should a CEO stay so calm? By not letting “the little things irritate,” he says. Smith seldom loses his cool and, as The Power Index found during our brief phone conversation, he rarely changes his tone.
He doesn’t say he enjoys his job, rather that he “just gets on with it” and feels “accountable” for his decisions. He’s previously indicated he will retire from the bank in 2015, and implemented a series of internal management changes to help with succession (including a much celebrated ambition to have women filling 40% of management positions).
No matter where Smith lands after ANZ — where guessing it’ll be anywhere but Australia — he’ll be watching how his cherished Asia strategy pans out.
This article first appeared on The Power Index.