Speculation of Further Challenges — April to June 2010

While it appeared as though Norris had experienced a dramatic turnaround in the media during the period of its strong performance and share price recovery, the data suggests that the reconstruction of his authenticity was only temporary. Likewise, expressions of Norris’s confidence in the construction of the GFC as a Tame problem was also momentary. From May 2010, Norris re- characterised the recovery of the economy as a Wicked problem. This was conveyed through a renewed emphasis on uncertainty and volatility: “Norris says there is no relief in sight for bank funding costs” (RN179), “the Commonwealth Bank yesterday warned its strong earnings might be hard to maintain in the second half in the face of higher funding costs, margin pressure and economic volatility” (RN181) and “Norris remained cautious and used the example of the debt crisis in Greece to illustrate the uncertainties afflicting the global economies” (RN185). The need for ongoing consideration of the situation via a ‘leadership’ approach is reflected in his assertions that “recovery from the GFC will take time and there will be challenges along the way” (RN185). Norris’s depiction of an unknowable economic environment can also be seen in (RN181):

“In the near-term outlook there’s no doubt the operating environment remains challenging and the short-term risks and uncertainties remain. Europe is clearly a case in point. There will be ups and downs. The economic environment will be a problem and there will not be a straight line to recovery.”

In the excerpt above, Norris complicates the previous construction of the GFC as progressing on a road towards recovery, and now characterises that path as long, rough, and winding. This was reflected in the bank’s share price when its steady rise throughout 2009 and early 2010 was interrupted with a small decrease in late April 2010. Norris announced that the bank was on track to produce an annual result of at least $6.2 billion, while bad debt charges for the quarter had declined (RN181). Although the results were considered generally positive and in line with the market’s expectations, the article (RN181) explained that “investors sold off Commonwealth by 1 per cent to $54.30, after chief executive Ralph Norris revealed he expected significant challenges”, suggesting that his renewed emphasis on a Wicked construction of the economic environment hindered investor confidence. It also fuelled media speculation that Norris’s caution indicated that CBA would raise the bank’s lending rates again (RN179). CBA’s share price fluctuated at a value of approximately $51 for the remainder of the year (MarketWatch, 2011a).

In the last few months of the GFC’s coverage in the media before July 2010, media representations of Norris reverted to previous constructions of inauthenticity. In particular, the bank became framed again as the aggressive predator who “snapped BankWest up for just 0.8 times its

book value” (RN187). CBA is also described as having “exploited an historic opportunity in the financial crisis to establish clear leadership in the residential home-lending market [and] pursued organic growth by targeting the flood of first-home buyers” (RN188). In this case, CBA is characterised as the predator whose customers (first-home buyers) were ‘pursued’ and ‘targeted’ like prey.

Norris’s apparent failure to conform to Australian cultural norms was reintroduced in the media. His anti-egalitarianism is re-established through reports that although CBA issued a distributed bonus payment of over $44 million for all employees, Norris personally received $3.5 million (RN189). While the staff bonus payment could be construed as evidence for Norris’s respect for his staff and the possession of moral integrity, it is conversely depicted as a sign of his wealth, framing the staff’s bonus as “just 1/3480th _{the size of that now due to Mr Norris” (RN189).} Questions of Norris’s pay are positioned in wider discourses of CEO remuneration, which saw the sustained increase of cash earnings and the subsequent widening gap between CEOs and ordinary wage and salary earners in Australia (Shields, 2005). It is an issue often scrutinised in the media, particularly as the trend of increasing pay for corporate executives has occurred in the face of arguments for employee pay restraints (Shields, 2005).

Additionally, his ‘foreignness’ is evoked to suggest his rejection of Australian culture. For example, (RN190) observes that “half of Commonwealth Bank’s 12-strong senior management team, notably including chief executive and All Blacks fanatic Ralph Norris, hail from the Shaky Isles”. The article hints towards Norris’s bias in recruiting his senior management team from New Zealand over local talent by referring to his support of the New Zealand national rugby team, the All Blacks. In the field of Australia’s cherished cultural tradition of sports, the article highlights Norris’s fanatic alliance for his home country’s team, rather than embracing Australian sporting teams and cultural values.

4.4. Summary and Conclusion

Over the five years of his tenure from the time of his appointment in September 2005 until the cessation of extensive media reporting about the GFC in June 2010, media constructions of Norris were predominantly characterised by powerful portrayals of inauthenticity. Norris was represented in the media as avoiding ‘command’ approaches. Instead, his cautiousness in what was primarily framed for and by him, as a volatile and uncertain economic environment was emphasised. Although according to Grint (2005a), Norris’s ‘leadership’ approach is considered appropriate for a Wicked construction of the economy, the media’s continual framing of the bank as being in a state of immense strength and dominance facilitated the characterisations of Norris as inauthentic.

Norris arrived at the bank during a time when it was depicted in the media as strong but facing a number of challenges including its failing business lending operations and low customer satisfaction ratings. Norris was heralded in the media as a change agent, where the proto-story of development as a natural process was employed to suggest that he would be innately driven to enact a more ‘revolutionary’ change at the bank. However, Norris was represented in the media as defying these expectations, arguing instead for a more careful approach towards ‘evolutionary’ change. Rather than construct his cautiousness as sensible, Norris’s proposal for an ongoing, ‘evolutionary’ strategy was framed as emotional rather than rational, resulting in the reversal of the media’s initial constructions of him at his appointment as a hyper-masculine agent of change.

Despite a generally well-performing share price from the time of Norris’s arrival at CBA to the onset of the GFC, media representations frequently portrayed him as secretive and lacking in moral integrity, while any hope and optimism he displayed were framed as misplaced. Moreover, Norris was not seen in the media to embrace Australian cultural values or practices, which sustained his portrayal as an ‘outsider’. Norris’s portraits never showed him to wear anything other than a full business suit, which enhanced a professional, yet impersonal image, while his ‘foreignness’ as a ‘Kiwi’ was utilised to highlight his inability to identify with the Australian public.

Norris’s lack of a coherent identity further enhanced the construction of inauthenticity in the media. Without an ongoing persona through which Norris’s behaviours could be situated and understood, his leadership qualities were predominantly communicated through literal attributions as opposed to vivid and salient metaphors. For example, media constructions could have linked Norris’s cautiousness with a precise and meticulous coherent identity credited to his professional experience in IT, describing his strategy and decisions for the bank through technological metaphors such as to ‘upgrade the bank’ or ‘run simulations to consider all possible outcomes’. Without a coherent identity, the inconsistency of Norris’s leadership responses was accentuated, which ultimately enhanced his construction as an inauthentic leader.

As the GFC progressed throughout 2008, the media continued to frame the GFC as a Wicked problem for the Australian economy yet construed CBA’s acquisition of BankWest in October 2008 as further evidence for Norris’s disproportionate power and how he benefited from the misery of others. On one hand, the external environment was characterised through metaphors of darkness and shadows to convey a strong sense of an uncertain and unpredictable situation, yet on the other, the media suggests that CBA had opportunistically preyed on a smaller bank that was not strong enough to withstand the GFC. As such, the bank became characterised as a large and aggressive predator, even as CBA’s acquisition was framed as the tough and decisive approach that Norris was criticised as not sufficiently exercising after his appointment.

Norris’s media representations during the GFC illustrate the crucial role of visuals and context in the social construction of authentic leadership. On the surface, news stories about CBA touted its strength and appeared to provide evidence for Norris’s display of leadership qualities such as hope, optimism, self-awareness and exposure, and moral integrity. However, multi-modal analysis of the newspaper pages revealed that constructions of authenticity were communicated with low salience and composed with other news stories that contradict its positive messages with more powerful expressions of corporate failures and economic challenges. Similarly, the framing of the GFC as an uncertain Wicked problem stood in stark contrast to the ‘strong’ bank, which became depicted as preying on weaker players and benefiting while others suffered.

When CBA’s share price began to improve after mid-2009 and discourse of the GFC shifted from a Wicked situation to a diminishing problem for the economy in January 2010, Norris enjoyed a brief period during which a sense of his authenticity was restored in the media. However, without a coherent identity, the short-lived depiction of him as a humble and hardworking leader failed to turn the construction of his inauthenticity around.

By April 2010, Norris was quoted as reverting to his consistent and characteristic portrayal of the economic environment as experiencing a Wicked problem and his cautious disposition towards it, but this fuelled media speculation that the bank was facing considerable challenges and an imminent interest rate increase. Norris’s display of caution once more worked to the detriment, rather than the benefit, of the bank’s share price performance and his authenticity. The various constructions that constitute the representation of Norris’s leadership in the media over the five key events of his tenure are summarised in Table 4.2.

In contrast, John Stewart of the National Bank of Australia shared numerous life stories with the media, and as such, a salient coherent identity was constructed during his tenure. His leadership, as portrayed in the media during the GFC, will be presented in the following chapter.

Table 4.2 Framings of the GFC and Ralph Norris

Key Event

1 2 3 4 5

Interest rate increase and

announcement of profit Acquisition of BankWest Collapse of Storm Financial First-half profit upgrade Speculation of further challenges February to September 2008 October 2008 to January ₂₀₀₉ January 2009 to January ₂₀₁₀ January to April 2010 April to June 2010

Illustration of Framing of the Global Financial

Crisis

Wicked

“It’s not surprising that in this current environment of financial uncertainty there has been a rush of money into bank deposits” (RN81).

Wicked

“‘It is extremely difficult to forecast impairment expenses seven months before year-end in such an uncertain economic environment’”, (RN104).

Wicked

“Norris warned Australia’s economy was not out of the woods, with rising unemployment and slowing credit growth making the outlook uncertain” (RN131).

Tame

“The improved outlook for the nation’s biggest home lender […]

highlights the momentum building across the Australian economy”, (RN164).

Wicked

“Norris says there is no relief in sight for bank funding costs” (RN179).

Ralph Norris’s Response Leadership Command Leadership Management Leadership

Significance on Leadership Authenticity

Norris admitted to the bank’s mistake of not increasing interest rates earlier, revising his decision through a lengthy and reflective ‘leadership’ approach. However, he was constructed as

inauthentic, controlling the lives of the Australian public.

CBA’s acquisition of BankWest was depicted as a ‘command’ approach that was predatory and

opportunistic. Norris became framed as being too tough as he secures his dominance over the banking sector.

The lengthy period of time it took for Norris to apologise for CBA’s involvement with Storm Financial was characterised as a sign of his

inconsistency and inauthenticity. His demonstrations of moral integrity were side-lined in newspaper page

compositions.

The renewed confidence for an economic recovery led to a transformation of Norris’s leadership identity. He became constructed as confident and successful, as well as a humble ‘everyman’ who was identifiable with the Australian public.

Norris’s persistent emphasis on the uncertainty of the

economy prompted media speculation that CBA intended to raise interest rates, and media

constructions reverted to characterisations of Norris as powerful and rapacious.

Chapter Five

John Stewart of National Australia Bank

5.1. Introduction

NAB was formed in 1858 under the name The National Bank of Australasia and began to trade as the National Australia Bank after it merged with the Commercial Banking Company of Sydney in 1981 (The National Australia Bank Group, 1996). Shortly after, NAB purchased four regional banks in the United Kingdom and Republic of Ireland (Standing Committee on Finance and Public Administration, 1991). Over the next two decades, NAB sustained its strategy for overseas expansion, which was considered one the most effective internationalisation strategies of an Australian bank (Kitay, 1999). NAB had successfully pursued international acquisitions in New Zealand, England, Scotland, Northern Ireland, and the US, and by 1995, only 56 per cent of its assets remained in Australia (Kitay, 1999). Particularly during the 1990s, NAB consistently maintained the lowest cost/income ratio of the Australian banks, which allowed it to remain prosperous during this decade while its rivals suffered financial difficulties (Kitay, 1999). All the other major banks were forced to downsize and cut staff to remain competitive with NAB. However, by the late 1990s, NAB followed suit and also engaged in cost-cutting strategies to maintain its cost/income lead (Kitay, 1999).

NAB’s most significant acquisition was of MLC, an asset and wealth management company in 2000, which marked NAB’s first multi-billion dollar local acquisition and allowed the company to become the country’s third largest money manager (White and Boreham, 2000). After 2000, NAB experienced a period of difficulty, which forced the bank to sell some of its more unprofitable businesses, such as Michigan National Bank and HomeSide in the US (Kemp, 2001). In 2004, NAB faced a number of controversies, including its Irish subsidiary being investigated for tax evasion and intentional overcharging of its customers (D. Hughes, 2004). NAB also discovered in this period that its foreign currency options traders had been engaging in unauthorised spot trades over several years to falsify profits in attempts to increase bonus payments (A. Hughes, 2004a). As a result of the unauthorised trades, losses of $360 million had been hidden (A. Hughes, 2004a). This discovery led to two NAB traders sentenced to jail terms, and caused dissent within the Board when one of the bank’s Directors, Catherine Walters, spoke out against the bank’s opaque practices and called for an overhaul of Board leadership (A. Hughes, 2004b). Eventually, this led to the forced resignations of the CEO, Frank Cicutto and Chairman Charles Allen in February 2004.

The disgraced Cicutto was immediately replaced by John Stewart, who had been a Board member of NAB Group since August 2003 (The National Australia Bank Group, 2004). Stewart’s

banking experience was gained as CEO of the Woolwich Building Society in the UK and Deputy Chief Executive of Barclays when Barclays acquired the Woolwich in 2000 (The National Australia Bank Group, 2004). In many ways, Stewart’s appointment broke with the traditions of NAB. The Scottish CEO was the first non-Australian to lead NAB and the first to have had only a few months of experience within the bank, while his predecessors had all worked their way up through the ranks of the organisation (JS3).

This chapter outlines the results of the media data analysis on John Stewart, CEO of NAB, from the time of his appointment in February 2004 until his departure from the bank at the height of the GFC in August 2008. With $56.41 billion, NAB is at April 2011 the fourth largest bank in Australia by market capitalisation (MarketWatch, 2011b). The results of the media analysis are presented with the inclusion of selected microfilm scans of the original publications and quotes from the verbal text that best represent the broader data set. For Stewart, a total of 164 media articles, among which 150 were scanned from the original newspapers, were coded as per the categories detailed in Chapter Three.

The first section of the chapter details Stewart’s representation as the change agent at his appointment to NAB in February 2004. It explores the challenges that beset Stewart, expectations for his leadership, and the salient establishment of his coherent identity as a sailor. The characterisation of NAB as experiencing a ‘crisis’ at Stewart’s appointment critically shaped the way in which Stewart was positioned to navigate the bank through its second ‘crisis’ of the GFC. The second section of this chapter presents the findings on how the GFC and Stewart were depicted in the media. This section is organised around three key events for NAB that occurred during the GFC. They are: NAB’s announcement of a strong first-half profit in May 2008; an unexpected $830 million bad debt provision in July 2008; and announcement of Stewart’s resignation from NAB in August 2008. The final section offers a summary and conclusion of the findings of the data analysis on Stewart.