Profits, strikes, settlements and huge paypackets: The ANZ career of David Hisco

Tuesday, 18 June 2019

ANZ CEO David Hisco has gone from the bank after spending thousands of dollars on corporate cars and wine storage.

ANALYSIS: ANZ was trying to put two hugely embarrassing corporate fails behind it when David Hisco took up the role as the bank's chief executive in September 2010.

Hisco left ANZ officially on Monday, with chairman Sir John Key revealing it was the result of an expenses investigation which found he had recorded tens of thousands of dollars of personal expenses for storing wine and cars as business expenses.

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But back in 2010 when Hisco was recruited from ANZ in Australia, the bank was worried about far larger sums of money.

ANZ had just done a deal with Inland Revenue to pay $413.7 million in tax and penalty interest, in return for the taxman dropping legal action against it for a series of tax-reducing cross-border transactions done by ANZ and National Bank.

David Hisco was the best-paid chief executive in banking for eight straight years.

* ANZ chairman Sir John Key fronts media over chief executive Hisco's departure

* ANZ chief executive leaving following review of personal expenses

* Six times ANZ has been in regulators' naughty corner**

In Hisco's second week on the job, ANZ sent out a notice to mum and dad investors in two disastrous managed funds that had caused them huge losses, and which ANZ provided compensation.

Another $45m of compensation was coming their way, the notice said.

It was part of another deal with a regulator, this time the Commerce Commission, which had investigated the sale of the funds, which invested in complex investments linked to United States sub-prime mortgages and high-interest company debt.

A steady hand was needed on ANZ's tiller, especially as Canterbury continued to be shaken by aftershocks from the September 7.1 magnitude earthquake in Christchurch.

Hisco moved across to New Zealand from Melbourne, Australia, where he was ANZ commercial group managing director for Australia.

He was a 30-year veteran with the bank, though it was not his first time in New Zealand, having headed UDC Finance between 1998 and 2000, leading a major restructuring in which the UDC branch network was closed down.

He replaced chief executive Jenny Fagg, who was suffering from cancer, and there was a big job to do.

The bank was working towards extinguishing the National Bank brand, which it had bought in 2003 from Britain's Lloyds Bank, and there was speculation many customers would jump once the blue-blooded black horse brand was withdrawn, and branches closed.

The National Bank brand was killed off in 2013, accompanied by a huge advertising campaign designed to keep as many customers as possible, and Hisco claimed victory.

'In the first month there was a bit of a flurry with people who protested,' Hisco said. 'If you've got two-odd million customers, you're going to get a few who vote with their feet.'

Speaking at the end of 2013, he said: 'Everybody here's pretty happy with the outcome, in fact, we've stopped talking about it now.'

Hisco joined ANZ with a massive pay-packet which immediately made him the best paid banker in the country, earning 34 times the average ANZ employee.

Throughout his career his fat salary continued to cause controversy.

In 2015, First Union adviser Morgan Godfrey said Hisco earned 123 times more than the lowest worker salary band at the bank.

There were strikes by ANZ staff in the same year calling for a fair share of the bank's ever-increasing profit.

But as long as profits, driven by ever-rising mortgage lending increased, the salary snipers' gripes were ignored.

In the year to the end of September 2015, the bank posted a $1.7 billion profit after tax, compared to $882m in the year preceding his hiring.

In 2015 ANZ boss David Hisco defended the bank's profitability, saying its return on equity was middle-of-the-range.

Last year the profit was a record $1.99b.

It was a number so large Hisco seemed to believe many would struggle to understand where it came from.

'It's hard for people to stick with you when you explain the size of the numbers,' Hisco said.

During his time at the head of the bank, he often sought to downplay the scale of the bank's profits.

AC/DC is a favourite of David Hisco, ex-chief executive of ANZ..

In 2017, goaded by Green Party MP Denise Roche dubbing its returns 'super profits', Hisco claimed its $1.7b profit was 'only middle of the range'.

'Many companies will have a far better return on equity. If you declared profit on the basis of profit per share we wouldn't look that exciting,' he claimed.

Hisco's departure comes at a time when the bank's profits have plateaued.

In May, the bank announced a six-month after-tax profit of $929m.

'The housing market has levelled off, particularly in Auckland which has been the growth engine of that sector over the past 10 years,' Hisco explained.

'When you combine that with historically low interest rates, intense competition in home lending that has impacted bank net interest margins, and our fee reductions, underlying revenue growth has been muted.'

It wasn't just his salary Hisco was called on to defend.

In 2014, ANZ agreed a settlement with the Commerce Commission to compensate farmers for losses from complex interest rate swap loans, though the sales dated from before Hisco's time as chief executive.

Last year, following a critical conduct and culture review by the Financial Markets Authority and Reserve Bank, ANZ agreed to stop paying staff sales commission that incentivised pushing products like loans, insurance and KiwiSaver to customers, whether they wanted it or not.

And in May Hisco faced flack when the Reserve Bank censured ANZ for failures in risk-management, which led to calls for Key to resign.

This was followed by Hisco's departure from the bank, which revealed his investment in a collection of wine large enough to need specialist storage in Australia, and a love of corporate cars.

Another tantalising detail from Hisco's time at ANZ is that like Keith Richards, Hisco owns a vintage Fender Telecaster and 'wields his axe across the Stones, AC/DC and Dragon back catalogues', as the ANZ publicity office put it.