Broom at the top for Aussie bank

By Stuart Kelly  |   2008-8-1  |     NEWSPAPER EDITION

NATIONAL Australia Bank has promoted Cameron Clyne to chief executive officer, replacing John Stewart after swelling credit-market losses triggered the company's worst share slump in 21 years.

Clyne, 40, joined Australia's biggest bank in 2004 and had run its New Zealand unit for 18 months, Bloomberg News reported.

He will work alongside Stewart, 59, beginning on October 1 and take over at the start of next year, the company said yesterday.

The former rugby player takes charge of a bank whose shares underperformed all local competitors since Stewart was appointed in 2004 after a trading scandal led to a boardroom purge.

Clyne, who becomes the youngest CEO at one of Australia's five biggest banks, will have to contend with a slowing economy and a credit market crunch that led NAB to boost provisions against possible securities losses fivefold last Friday.

"Stewart has clearly decided to be the fall guy, take the heat, and step back for the new guy," said Sean Fenton, who manages the equivalent of US$700 million, including shares of NAB, at Tribeca Investment Partners in Sydney.

"It's a challenging time for the new man to take overas CEO of a major bank."

NAB's announcement last Friday said that it set aside an additional A$830 million (US$784 million) for possible losses on collateralized-debt obligations sparked the biggest one-day drop in the stock since the October 1987 market crash. The stock lost almost 3 percent yesterday.

The disclosure caused investors to pull out of a planned A$850-million bond sale, forcing NAB to scale back the offering by two-thirds. Standard & Poor's cut its outlook on NAB's credit rating and said the company may have more losses from credit-market investments.

Chairman Michael Chaney said Stewart's resignation had nothing to do with the provisions, adding that speculation about further losses was "entirely off the mark."