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NAB blames centralised approach on September 11

NAB blames centralised approach on September 11

(1 February 2005 – Australia) National Australia Bank chief executive John Stewart said the bank’s overly conservative and bureaucratic approach to lending was a response to the terrorist attacks on September 11, 2001. He said this was the primary reason for stalled revenue growth in 2004.

Speaking at the bank’s annual general meeting in Melbourne, Stewart told shareholders that the bank took the view that a global economic slowdown was "very likely" after the attacks on the World Trade Centre in New York.

"In line with this we reduced our credit risk appetite," he said.

"However, in practice we overshot our target and went to very restrictive settings that meant we were only lending when we had high levels of security," Stewart said.

This approach led to centralised and overly beaurocratic business processes that frustrated people working in the field.

Stewart cited the example of a young business banker in Queensland:

"[He] told me he could approve less than 10 percent of loans that fell within his delegated authority without first sending the paper work for further review," he said.

"Clearly such a process is unacceptable because it creates additional cost; it de-motivates the banker and reduces our chances of success with the customer if there are delays."

Stewart said becoming more efficient and streamlined rather than a bank that was hard to deal with was part of the bank’s cultural make-over.

During the turbulent meeting, the bank apologised for the foreign exchange debacle and pledged to grow profits over the second half of 2005.
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