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Wounded ME bank boss surprises board with speedy exit – Sydney Morning Herald

Jamie McPhee’s decision to quit as chief executive will fuel speculation that ME Bank is on the market.



For his part, McPhee says he subscribes to the view that once a chief executive decides to leave it’s better for the organisation that they go immediately. Clearly hes not a fan of the long transition.
Another potential issue to factor into the equation is stubborn speculation that the bank has quietly put up a for sale sign – a move that is said to be supported by its industry fund owners. McPhee declined to be drawn on that speculation.
Additionally significant is that McPhee is leaving in the middle of a once in a lifetime recession, a global health pandemic and a potential credit crisis.
ME Bank is strongly asserting the decision to leave was McPhees and that there is no connection between the customer redraw issue and Tuesdays announcement of his resignation.
In other words the board is not punishing McPhee.
But it is hard to believe that the wounding events of this year did not influence McPhees own decision.
To have been placed under such immense pressure from the media and customers, unceremoniously grilled over a hot flame by the house of representatives economics committee and skewered by the Australian Securities and Investments Commission, takes its toll.
That would test the resolve of any chief executive.
Had McPhee stayed he would face a more important problem going forward – the banks history of not delivering dividends to its shareholders.
It was during his appearance before the house of representatives committee that McPhee revealed pre-pandemic plans to start paying dividends had been stalled because of COVID-19.
ME Bank is not alone in this regard – several banks including two of the big four – declared no dividends at their most recent results.
This move to conserve capital was born out of pressure from the financial regulator, the Australian Prudential Regulation Authority which was concerned that lenders conserve balance sheet power.
ME Banks historical lack of dividend return comes despite a more than doubling in customer numbers over the past 10 years and a 50 per cent increase in assets to almost $30 billion.
The reality is that when the bank was created back in the 1990s (by the ACTU and National Mutual) it had a significant advantage over its big bank peers because of its lower cost of funds. Plus it had access to a pool of industry fund members.
But as decades progressed it never really achieved the return on equity of the big four. It has grown and remained in good financial shape but it has never really taken off.
McPhee commented, In deciding to call time, I know the bank is in a strong position financially and is well placed for the future, but that the industry challenges ahead and resulting need for change will require a long-term commitment.
“After 10 and a half years as CEO, I believe now is the best time to hand over the reins to give ownership of the banks post-COVID strategy development and long-term execution to a new CEO.”
McPhee said the timing was “right for me and right for the bank”.

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