00:00:02
Speaker 1: One of the most powerful women in global finance is calling time. What comes next could shape one of Australia's biggest banks for decades. Hello, I'm Rebecca Jones and welcome to the Bloomberg Australian Podcast. After nearly four decades at mcquarie in almost eight years as its chief executive, Chamara wick Ramanaka is stepping down. She leaves as one of the world's highest paid female bankers, with mcquarie shares worth almost half a billion Aussie dollars and a company that's almost doubled in value during her tenure. But her legacy is much more complicated than that. Alongside record profits has come regulatory scrutiny, cultural questions, and a series of governance challengers that have forced investors to ask what the next era of McQuary should look like. So today on the podcast, we're asking what does McCrary become after Shamara. I can think of no better person for the job than Bloomberg's finance reporter Melbourne based to Rich Henderson. He joins me this week, Rich, welcome back to the pod. Thank you so much, so Rich. When people think about Shamara, many may remember the headlines around her paypacket. Look, I just mentioned it in my intro, but if we're looking through the lens of history, what a market's actually really going to remember her for.
00:01:26
Speaker 2: She certainly has earned a lot of money. I think shareholders would probably say she delivered so much for them that she earned every dollar. I think the long arc of history, you know, folks who will look back at Samara's legacy as one of guiding this very unique company, very unique financial company. We don't really have anything like it in Australia globally. I would, you know, struggle to think of something off the top of my head. Given the way it operates, it has very different business lines. It's a very entrepreneurial place. You hear this word, and I think Samara she spent you know, pretty much her whole career there. She really embodied that, and she understood that, and so she was able to steward it, to sort of supercharge it. And you know, we see the stock price at record highs. We see you know, record earnings under her under her tenure, So I think it will be yeah, thinking about her stewardship, you know, doing things that worked really well.
00:02:28
Speaker 1: I've noticed in the mainstream press since the announcements come out. Rich that there's been quite a big focus on the symbolism of Shamara becoming Macrorai's first woman CEO. But is the more important story that she happened to be a woman or that she turned out to be one of the bank's most successful leaders so far?
00:02:49
Speaker 2: Her track record should speak for itself. Yeah, yeah, did she smash the glass ceiling for sure, But you know, through her actions has proved that she was the right pick.
00:02:58
Speaker 1: I think what about her successor? Whose name is a Greg Ward? When this news broke late last week, I remember looking at the Bloomberg photo file and it's basically a family photo album. He's been at McCrory for a very long time as well, Rich, Why was he the chosen one?
00:03:17
Speaker 2: Greg Ward joined in the nineties, I believe, and he has had a few very senior roles for important roles. He was chief financial officer for fourteen years. He most recently has led the BFS unit. This is banking and financial services, and that is a real kind of success story for the business. It doesn't deliver the biggest earnings for the group, but they have been able to grow market share in the home lending industry market in Australia, which is a very attractive business. So he's been there a long time. He's been on the executive committee for a long time. He was Global CFO, so that means he understands how the business operates, all the different business lines. He knows where all the skeletons are. So I think it's a pretty smart choice from that point of view. Really, I want to pick up on.
00:04:13
Speaker 1: Something you said a little bit earlier, and that is the uniqueness of mcquarie as a company. You know. I think you know, by its own admission, they've always liked to describe themselves or think of themselves as a little bit different to the other big four banks in Australia that are incredibly well known. Does this test whether or not their culture is bigger than just the one leader?
00:04:34
Speaker 2: I think so, yeah, I think it. You know, Mcquarie is really just very unique. You know. If you're a bank, you offer a banking service, you loan money to folks, You try and make a profit on that, and you try and get more customers. If you're an investment manager, you offer funds, you try and perform well, You try and get more customers and turn a profit Mcquarie does and think like that. Macquarie basically has a big pile of money and they have expertise in commodities trading, asset management, retail banking, and they say, Okay, where's the opportunity. How can we make more money. What's the best thing we could do right now? Well, are commodities trading you know at elevated levels? Do we need to do more hedging products for companies around the world. Okay, let's do that. Let's put more capital into that business. And it's that's what makes it so entreprenurial. And I think, you know, when I think about the company, you know, there's some stats that just jump out at me. You know, Nick O'Kaine, he is the guy. He doesn't work there anymore. He in the year ending March end of March twenty twenty three, he made fifty more than fifty million Australian dollars, much more than Shamara, and he was leading the commodities business then. And it's because of the volatility that we saw following the Russia Ukraine War they were able to as a company make you huge profits from from hedging activities and through that commodities trading business. Right, that speaks to the entrepreneurial nature of the company.
00:06:09
Speaker 1: I'm glad you mentioned nicocaine because I think that's a really important point. Then that did make headlines when Okay departed mcquarie because well for one of the reasons, because he did run an incredibly successful unit of mcquarie. But I find it quite interesting that Ward is coming in and as you've mentioned, his background is retail banks and mortgages, mortgages and things like that. What will happen with the firm under Ward's elevation is that a deliberate move on behalf of the management at McQuary the board to have someone in there that can run a portfolio with sort of eye to the future. Given what we've seen in world commodity markets in the last couple of years, so so volatile.
00:06:52
Speaker 2: I think he will be very aware of how that business functions. As being a former CFO and a member of the executive can you know he would have been known all these meetings about, you know, how to allocate capital to that business. His coming through most recently, for the past thirteen ish years he's been with the retail banking division and he's made it a big success, you know, growing the market share in mortgages in Australia. This is a very steady, stable business. It's very different to the volatility of the commodities market, which can be really lumpy. You know, some years they're great, some years not so great, and it can be potentially quite expensive to support those opportunities and go after those opportunities and commodities. With the banking side, retail banking side, it can be a lot more steady and stable. Same with asset management, you know, you get basically these steady fees as revenue. So I think Ward will have a very strong command over that commodities business. But also yeah, I think it would make sense that Macquarie builds on the success it's had in recent years in retail banking with trying to grow market share in mortgages and deposits, et cetera. So I think his experience there is a sign we will see that business grow further.
00:08:04
Speaker 1: Is that why we're seeing I guess in the last thirteen years, but I mean I couldn't put it exact time frame on it. More advertising for mccrary's retail business on billboards and things like that things that we never used to see before.
00:08:15
Speaker 2: Definitely, Yeah, they're becoming more retail retail focus for sure.
00:08:20
Speaker 1: I'm interested in digging a little deeper into the competitive backdrop for mcquarie going forward. Richie, you're our finance reporter. What is the backdrop like right now for the big Australian banks.
00:08:33
Speaker 2: Well, for the big banks, obviously, the property market and home lending is a huge focus here. There's been a slow down widely reported in the property market. Fears that we're going to see prices drop meaningfully and that's going to and already has you know, started to show up with the big banks in terms of them suggesting signaling, some are giving some hard numbers about new mortgages basically the growth their drop off. It's also you know, when I'm thinking about Macquarie, there are and Greg Ward what kind of challenges he's going to face when he comes in. You know, there are some regulatory reputational issues that you know McQuary's navigating right now. One is KPMG Australia. Obviously there's allegations against KPMG around mishandling of confidential client information.
00:09:23
Speaker 1: McQuary is part of that.
00:09:24
Speaker 2: So Mcquarie hired KPMG Australia as its auditor and that contract is set to start in twenty twenty eight and a year from now McQuary's shareholders we'll actually get to vote on that. And mcquarie has launched a sort of internal review of the process and has asked KPMG to confirm that it can fulfill the contract that it's been awarded. So there's just a lot of heat there. It looks like McQuary's going to stick with KPMG Australia was definitely the tenor of comments made by Chair Glenn stear Evans at the annual general meeting. But there are other things that Macquary's had to deal with. There was a short selling reporting issue that it had to settle with the regulator here. You know, there's a scandal in the UK revolving around Thames Water, a utility. Macquari basically bought it and face accusations that it loaded this utility with debt while sort of drawing down profits and exited the company. And that's you know, some shareholders have complained that they lost money and basically Mcquarie said, you know, it needed to raise the money for this UK utility to update the network. So there was just a lot of basically bad press around that for McQuary.
00:10:41
Speaker 1: What about Mcquarie Capital, they've been in the news recently too.
00:10:45
Speaker 2: Yeah, so there's been some basically some letters sent by staff within Mcquarie Capital, which is like the investment banking arm of McQuary, sent to the group's chair Glenn Stevens, saying you know, there's some cultural issues use They were a little bit vague in the allegations which have been reported by the Australian Financial Review, and the chair basically came out and said, you know, you know, we've looked into these issues. We don't think there's a problem here. We're satisfied with our process. But again it does underscore the fact that internally at Macquarie there are some voices that aren't happy and they're willing to speak up and Ward will have to contend with that sort of tension internally when he takes the reins.
00:11:35
Speaker 1: So rich you were listening at the AGM which happened last Thursday, we weren't sure at the time. Ward wasn't on the docket to speak. He was announced that morning. He was a late edition a late addition to the roster, so you had the opportunity to join a call, the media call. What was the vibe on that call that morning?
00:11:56
Speaker 2: The vibe was, I mean it was pretty upbeats, you know, Shemara were you know, folks were asking, you know, what are you going to do next, Shamia, and she was basically saying, you know, head down, guston leading the company and transitioning over to leadership under Greg. You know, Greg seemed excited. He seemed like he was going to keep quarry on the path. It's you know, charting for itself. So yeah, but it was a pretty upbeat conversation.
00:12:23
Speaker 1: And of course when the news broke, which was before the AGM on Thursday, Rich you were hitting the phone straight away and talking to investors, the top end of town fund managers to see what they had made of the announcement. What was this snap reaction? It was very positive Broadly.
00:12:39
Speaker 2: I think the success that Greg wad has had in the retail business is kind of momentum. Is a good story there. And I asked the chair Glenn Stevens, you know what attributes of Greg's you know, got him over the line, because obviously there's going to be a bunch of very able candidates at Macquarie. You know why Greg Ward and Glenn said. One thing I remember that he said was that Gregg's grasp of technology was one, you know, attribute that they really liked, the board really liked. So, you know, Macquarie. When I go out and talk to mortgage brokers, the topic of Macquarie's technology often comes up. It's a little bit you know, they can process things a little bit faster because of their technology. You know, that's obviously been a key driver under award. It's very well known within the retail banking market. So the fact that Glenn Stevens pointed to that directly within this age of technological change, I think that's quite notable.
00:13:34
Speaker 1: Was that something that the fund managers and the portfolio managers also agreed with the research houses?
00:13:40
Speaker 2: Definitely? Yes. One analyst I spoke to mentioned that, and I think again it's something that's quite widely known that for at least on the mortgage side, their technology they have an edge there. You hear that a lot from mortgage brokers.
00:13:56
Speaker 1: So when we look back on the almost eight years of Shamara's tenure, there has been a lot of profit made some choppy regulatory waters, pretty significant change for their commodities business, and a new chief who has most recently been steering the retail banking unit, which has had some recent success. My final question to you, Rich Henderson, will we be sitting here in eight years time considering the legacy of Greg Ward.
00:14:24
Speaker 2: Yeah, so I think that's that's a good question, because you know, Samara has basically during her time doubled the stock price. You know, we've had record profits. What I think is a good sign for Greg wat who's coming in, is that since the announcement that he's taking over has hit, the share price has pretty much held its value. And so that's a signed investors are comfortable with him. I would take some comfort in his experience at CFO. He understands the business, his success we can say in building out that retail banking division and that momentum there, I think we'll stand the company in for a good stead Can he get the commodities business right as a leader? Can he pursue opportunities aggressively at the right time like Shamara has to build revenue and earnings. You know, these are quick key questions, but so far the market seems confident he can.
00:15:19
Speaker 1: You can read Rich's full report on the transition at Macquarie, at Bloomberg dot com for subscribers, and on the Bloomberg terminal. If you found today's conversation insightful, be sure to follow the Bloomberg Australia podcast wherever you listen. This episode was recorded on the traditional lands of the Were Wondering People. It was produced by Paul Allen and edited by Chris Burke and Ainsley Chandler. Additional reporting by Amy Bainbridge and Sharon Klein. I'm Rebecca Jones. We'll see you next week.
Speaker 1: One of the most powerful women in global finance is calling time. What comes next could shape one of Australia's biggest banks for decades. Hello, I'm Rebecca Jones and welcome to the Bloomberg Australian Podcast. After nearly four decades at mcquarie in almost eight years as its chief executive, Chamara wick Ramanaka is stepping down. She leaves as one of the world's highest paid female bankers, with mcquarie shares worth almost half a billion Aussie dollars and a company that's almost doubled in value during her tenure. But her legacy is much more complicated than that. Alongside record profits has come regulatory scrutiny, cultural questions, and a series of governance challengers that have forced investors to ask what the next era of McQuary should look like. So today on the podcast, we're asking what does McCrary become after Shamara. I can think of no better person for the job than Bloomberg's finance reporter Melbourne based to Rich Henderson. He joins me this week, Rich, welcome back to the pod. Thank you so much, so Rich. When people think about Shamara, many may remember the headlines around her paypacket. Look, I just mentioned it in my intro, but if we're looking through the lens of history, what a market's actually really going to remember her for.
00:01:26
Speaker 2: She certainly has earned a lot of money. I think shareholders would probably say she delivered so much for them that she earned every dollar. I think the long arc of history, you know, folks who will look back at Samara's legacy as one of guiding this very unique company, very unique financial company. We don't really have anything like it in Australia globally. I would, you know, struggle to think of something off the top of my head. Given the way it operates, it has very different business lines. It's a very entrepreneurial place. You hear this word, and I think Samara she spent you know, pretty much her whole career there. She really embodied that, and she understood that, and so she was able to steward it, to sort of supercharge it. And you know, we see the stock price at record highs. We see you know, record earnings under her under her tenure, So I think it will be yeah, thinking about her stewardship, you know, doing things that worked really well.
00:02:28
Speaker 1: I've noticed in the mainstream press since the announcements come out. Rich that there's been quite a big focus on the symbolism of Shamara becoming Macrorai's first woman CEO. But is the more important story that she happened to be a woman or that she turned out to be one of the bank's most successful leaders so far?
00:02:49
Speaker 2: Her track record should speak for itself. Yeah, yeah, did she smash the glass ceiling for sure, But you know, through her actions has proved that she was the right pick.
00:02:58
Speaker 1: I think what about her successor? Whose name is a Greg Ward? When this news broke late last week, I remember looking at the Bloomberg photo file and it's basically a family photo album. He's been at McCrory for a very long time as well, Rich, Why was he the chosen one?
00:03:17
Speaker 2: Greg Ward joined in the nineties, I believe, and he has had a few very senior roles for important roles. He was chief financial officer for fourteen years. He most recently has led the BFS unit. This is banking and financial services, and that is a real kind of success story for the business. It doesn't deliver the biggest earnings for the group, but they have been able to grow market share in the home lending industry market in Australia, which is a very attractive business. So he's been there a long time. He's been on the executive committee for a long time. He was Global CFO, so that means he understands how the business operates, all the different business lines. He knows where all the skeletons are. So I think it's a pretty smart choice from that point of view. Really, I want to pick up on.
00:04:13
Speaker 1: Something you said a little bit earlier, and that is the uniqueness of mcquarie as a company. You know. I think you know, by its own admission, they've always liked to describe themselves or think of themselves as a little bit different to the other big four banks in Australia that are incredibly well known. Does this test whether or not their culture is bigger than just the one leader?
00:04:34
Speaker 2: I think so, yeah, I think it. You know, Mcquarie is really just very unique. You know. If you're a bank, you offer a banking service, you loan money to folks, You try and make a profit on that, and you try and get more customers. If you're an investment manager, you offer funds, you try and perform well, You try and get more customers and turn a profit Mcquarie does and think like that. Macquarie basically has a big pile of money and they have expertise in commodities trading, asset management, retail banking, and they say, Okay, where's the opportunity. How can we make more money. What's the best thing we could do right now? Well, are commodities trading you know at elevated levels? Do we need to do more hedging products for companies around the world. Okay, let's do that. Let's put more capital into that business. And it's that's what makes it so entreprenurial. And I think, you know, when I think about the company, you know, there's some stats that just jump out at me. You know, Nick O'Kaine, he is the guy. He doesn't work there anymore. He in the year ending March end of March twenty twenty three, he made fifty more than fifty million Australian dollars, much more than Shamara, and he was leading the commodities business then. And it's because of the volatility that we saw following the Russia Ukraine War they were able to as a company make you huge profits from from hedging activities and through that commodities trading business. Right, that speaks to the entrepreneurial nature of the company.
00:06:09
Speaker 1: I'm glad you mentioned nicocaine because I think that's a really important point. Then that did make headlines when Okay departed mcquarie because well for one of the reasons, because he did run an incredibly successful unit of mcquarie. But I find it quite interesting that Ward is coming in and as you've mentioned, his background is retail banks and mortgages, mortgages and things like that. What will happen with the firm under Ward's elevation is that a deliberate move on behalf of the management at McQuary the board to have someone in there that can run a portfolio with sort of eye to the future. Given what we've seen in world commodity markets in the last couple of years, so so volatile.
00:06:52
Speaker 2: I think he will be very aware of how that business functions. As being a former CFO and a member of the executive can you know he would have been known all these meetings about, you know, how to allocate capital to that business. His coming through most recently, for the past thirteen ish years he's been with the retail banking division and he's made it a big success, you know, growing the market share in mortgages in Australia. This is a very steady, stable business. It's very different to the volatility of the commodities market, which can be really lumpy. You know, some years they're great, some years not so great, and it can be potentially quite expensive to support those opportunities and go after those opportunities and commodities. With the banking side, retail banking side, it can be a lot more steady and stable. Same with asset management, you know, you get basically these steady fees as revenue. So I think Ward will have a very strong command over that commodities business. But also yeah, I think it would make sense that Macquarie builds on the success it's had in recent years in retail banking with trying to grow market share in mortgages and deposits, et cetera. So I think his experience there is a sign we will see that business grow further.
00:08:04
Speaker 1: Is that why we're seeing I guess in the last thirteen years, but I mean I couldn't put it exact time frame on it. More advertising for mccrary's retail business on billboards and things like that things that we never used to see before.
00:08:15
Speaker 2: Definitely, Yeah, they're becoming more retail retail focus for sure.
00:08:20
Speaker 1: I'm interested in digging a little deeper into the competitive backdrop for mcquarie going forward. Richie, you're our finance reporter. What is the backdrop like right now for the big Australian banks.
00:08:33
Speaker 2: Well, for the big banks, obviously, the property market and home lending is a huge focus here. There's been a slow down widely reported in the property market. Fears that we're going to see prices drop meaningfully and that's going to and already has you know, started to show up with the big banks in terms of them suggesting signaling, some are giving some hard numbers about new mortgages basically the growth their drop off. It's also you know, when I'm thinking about Macquarie, there are and Greg Ward what kind of challenges he's going to face when he comes in. You know, there are some regulatory reputational issues that you know McQuary's navigating right now. One is KPMG Australia. Obviously there's allegations against KPMG around mishandling of confidential client information.
00:09:23
Speaker 1: McQuary is part of that.
00:09:24
Speaker 2: So Mcquarie hired KPMG Australia as its auditor and that contract is set to start in twenty twenty eight and a year from now McQuary's shareholders we'll actually get to vote on that. And mcquarie has launched a sort of internal review of the process and has asked KPMG to confirm that it can fulfill the contract that it's been awarded. So there's just a lot of heat there. It looks like McQuary's going to stick with KPMG Australia was definitely the tenor of comments made by Chair Glenn stear Evans at the annual general meeting. But there are other things that Macquary's had to deal with. There was a short selling reporting issue that it had to settle with the regulator here. You know, there's a scandal in the UK revolving around Thames Water, a utility. Macquari basically bought it and face accusations that it loaded this utility with debt while sort of drawing down profits and exited the company. And that's you know, some shareholders have complained that they lost money and basically Mcquarie said, you know, it needed to raise the money for this UK utility to update the network. So there was just a lot of basically bad press around that for McQuary.
00:10:41
Speaker 1: What about Mcquarie Capital, they've been in the news recently too.
00:10:45
Speaker 2: Yeah, so there's been some basically some letters sent by staff within Mcquarie Capital, which is like the investment banking arm of McQuary, sent to the group's chair Glenn Stevens, saying you know, there's some cultural issues use They were a little bit vague in the allegations which have been reported by the Australian Financial Review, and the chair basically came out and said, you know, you know, we've looked into these issues. We don't think there's a problem here. We're satisfied with our process. But again it does underscore the fact that internally at Macquarie there are some voices that aren't happy and they're willing to speak up and Ward will have to contend with that sort of tension internally when he takes the reins.
00:11:35
Speaker 1: So rich you were listening at the AGM which happened last Thursday, we weren't sure at the time. Ward wasn't on the docket to speak. He was announced that morning. He was a late edition a late addition to the roster, so you had the opportunity to join a call, the media call. What was the vibe on that call that morning?
00:11:56
Speaker 2: The vibe was, I mean it was pretty upbeats, you know, Shemara were you know, folks were asking, you know, what are you going to do next, Shamia, and she was basically saying, you know, head down, guston leading the company and transitioning over to leadership under Greg. You know, Greg seemed excited. He seemed like he was going to keep quarry on the path. It's you know, charting for itself. So yeah, but it was a pretty upbeat conversation.
00:12:23
Speaker 1: And of course when the news broke, which was before the AGM on Thursday, Rich you were hitting the phone straight away and talking to investors, the top end of town fund managers to see what they had made of the announcement. What was this snap reaction? It was very positive Broadly.
00:12:39
Speaker 2: I think the success that Greg wad has had in the retail business is kind of momentum. Is a good story there. And I asked the chair Glenn Stevens, you know what attributes of Greg's you know, got him over the line, because obviously there's going to be a bunch of very able candidates at Macquarie. You know why Greg Ward and Glenn said. One thing I remember that he said was that Gregg's grasp of technology was one, you know, attribute that they really liked, the board really liked. So, you know, Macquarie. When I go out and talk to mortgage brokers, the topic of Macquarie's technology often comes up. It's a little bit you know, they can process things a little bit faster because of their technology. You know, that's obviously been a key driver under award. It's very well known within the retail banking market. So the fact that Glenn Stevens pointed to that directly within this age of technological change, I think that's quite notable.
00:13:34
Speaker 1: Was that something that the fund managers and the portfolio managers also agreed with the research houses?
00:13:40
Speaker 2: Definitely? Yes. One analyst I spoke to mentioned that, and I think again it's something that's quite widely known that for at least on the mortgage side, their technology they have an edge there. You hear that a lot from mortgage brokers.
00:13:56
Speaker 1: So when we look back on the almost eight years of Shamara's tenure, there has been a lot of profit made some choppy regulatory waters, pretty significant change for their commodities business, and a new chief who has most recently been steering the retail banking unit, which has had some recent success. My final question to you, Rich Henderson, will we be sitting here in eight years time considering the legacy of Greg Ward.
00:14:24
Speaker 2: Yeah, so I think that's that's a good question, because you know, Samara has basically during her time doubled the stock price. You know, we've had record profits. What I think is a good sign for Greg wat who's coming in, is that since the announcement that he's taking over has hit, the share price has pretty much held its value. And so that's a signed investors are comfortable with him. I would take some comfort in his experience at CFO. He understands the business, his success we can say in building out that retail banking division and that momentum there, I think we'll stand the company in for a good stead Can he get the commodities business right as a leader? Can he pursue opportunities aggressively at the right time like Shamara has to build revenue and earnings. You know, these are quick key questions, but so far the market seems confident he can.
00:15:19
Speaker 1: You can read Rich's full report on the transition at Macquarie, at Bloomberg dot com for subscribers, and on the Bloomberg terminal. If you found today's conversation insightful, be sure to follow the Bloomberg Australia podcast wherever you listen. This episode was recorded on the traditional lands of the Were Wondering People. It was produced by Paul Allen and edited by Chris Burke and Ainsley Chandler. Additional reporting by Amy Bainbridge and Sharon Klein. I'm Rebecca Jones. We'll see you next week.
