Notice Board - ANZ Retired Officers' Club (Vic)

Dan Kirtley Toast to the Bank December 2014

ANZROC – TOAST TO THE BANK DECEMBER 2014

Mr President, Peter Pritchard and Committee members, Chief Executive Officers, past and present, senior executives, members and partners: – good afternoon.

It is a great pleasure to be invited to propose the toast to the Bank which was my employer for a tad over 22 years. I know that is fleeting time compared to many ANZROC members however it was a highly satisfying and extremely interesting experience during which I formed many valuable friendships. Here are a few anecdotes from what occurred along the path.

I am happy to discuss material differences of opinion after I finish, However, there has been some embellishment to add interest!

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I joined ANZ in 1986 after stints of six years each with a Chartered Accountancy firm, Ford Asia-Pacific and Rio Tinto. The Ford and Rio jobs had involved extensive travel and I was looking forward to not having that factor in my new role at ANZ – keep that in mind as you hear a bit about how it played out.

Some of you will know that I spent the period from my recruitment in 1986, through to 1995 as Chief Internal Auditor of various business units or divisions. Now, I wish to assure all in the room that there will be no tales told that would be in any way embarrassing to anyone. That said and having surveyed the group earlier, I have had to reduce my speech by about 50%!

Moving on …….

When I reflect on the process followed for my recruitment, I should have known that my time with ANZ was going to be interesting.

My first interview for the newly established role of Chief Auditor, Esanda Finance was in July 1986 and obviously went well enough to be invited back for a second chat. The second interview occurred on a Friday afternoon when John Hogarth was being farewelled as CEO and Glen Twidale was taking over. I was invited to have a beer and join in the well-wishing. Clearly that “interview”

went well enough too because the job offer followed and the journey with ANZ began on 6th August 1986.

My task at Esanda was to lead a project to establish an internal audit service utilising IT audit analysis techniques and lap top computers which was quite revolutionary at the time – old hat now. I also first bumped into Ron Adams and Peter Pritchard at Esanda.

During this period there was a degree of tension between Esanda and Group Audit about autonomy in the context of the McKinsey Organisation Development initiative. This was a lot to do with degrees of business unit autonomy and accountability. I recall Barry Jackson writing a paper on the matter.

I was in a meat in the sandwich role with dotted and solid lines to Group Audit and Esanda GM Administration David Butler. Which line was dotted and which was solid was never really clear to me nor did it seem to really matter. Ultimately, it was resolved, for me at least, when Group General Manager Audit, Brian Waldron and Group Chief Internal Auditor Don Jeffrey thought I should go to New Zealand and re-do the Esanda internal audit redevelopment, but without the resources that Esanda had committed. Don denies this story but I remember several discussions quite clearly.

So its August 1988 and I find myself with the family in Wellington appointed as Chief Internal Auditor of ANZ New Zealand. At that time ANZ New Zealand had not seen many Australians appointed to roles in their bank with the flow being mainly in the opposite direction across the ditch. Some of you will recall that around that time Piggy Muldoon had famously opined that every Kiwi who went to Australia increased the IQ on both sides of the ditch! So what did it mean when an Aussie went the other way?

Paul Rizzo had been appointed as CEO ANZ New Zealand and he led the way. However, some NZ folks made it clear that they were not particularly impressed by having Aussies on their turf.

Alec Kirkland GM of the Retail Bank, now sadly departed, asked me with a bit of a wry grin what value I could add given that the bank in NZ had run itself well enough since 1856 when Jacky Box had sat astride the Bank’s cash chest

as it was rowed ashore in Wellington? We overcame that unpropitious start and played golf the next weekend.

After a wee while, Will Bailey decided we should buy Postbank which increased the level of interest and opportunity in NZ. We combined the two audit and credit inspection functions and a very competent Postbank fellow by the name of Wayne Stevenson was ultimately appointed to replace me and I was off to be the Chief Internal Auditor of the International Division in the glory days of ANZ Grindlays.

It was 1990, and Grindlays gave ANZ a footprint that spanned across South Asia and the Middle East. We also had extensive operations across the Pacific and the Far East. It was an adventure rather than a job to work in the International Division at that time with people like Achut Bommakanti, David Valentine, John Ries and Alistair Maitland.

And then there was April 1992. A stock market bubble had developed in India and a system of short-term investment in stocks called Badla was in full swing. ANZ Grindlays was the largest foreign bank in India and unfortunately, had the National Housing Bank of India (a subsidiary of the RBI) as a client. NHB was regularly moving a chunk of its cash reserves into and out of the stock market on a short term basis and was transferring its money to its broker via third party cheques routed through Grindlays for same day value.

The market crashed and NHB was invested and faced taking a bath. NHB looked around and seeing some deep pockets, determined that it was appropriate to ask Grindlays what it had done with the money paid to it – a total of 506 crores of rupees or around USD250m. Bear in mind that it was always intended that the value go to the broker. Sadly, we did not have covering letters authorising the value to be given to the broker.

When the situation first broke at around 10 am on a Monday morning, I was on a plane by 3.00 pm and spent the next three weeks investigating with New Zealander Alan Yates, Chief Auditor South Asia. That started a three year experience supporting a mediation process that for me, with Girish Vaidya and Jayant Yardi was a bridging role with the lawyers in India, senior management in India, London and Melbourne involving somewhere around 20 trips to India for periods ranging up to two months.

Cutting a very, very long story short, we won the three year mediation based on the assertion that the money went where it was intended to go but we lost on appeal because we did not have covering letters. Banking is a risky business!

While Chief Auditor International I got to know a tad too much about the Commercial Banking System Project. Steering Committee member Eamon Veaney was a leading light in establishing the CBS project and many other initiatives in International IT.

I was about number 20 on the list of people considered to take the job on when the General Manager in charge Alan Cooper (now sadly departed) decided suddenly to return to UK to retire– everybody else was too wise to accept.

The CBS project was extremely challenging requiring implementation into 18 countries. We were ultimately able to go live in a new country every three months, including India with its thousands of staff to be trained. The travel required was staggering. The operating model would be valuable IP today.

The Project was punctuated by the sale of Grindlays, just after we had developed an Islamic banking version for Pakistan which was never implemented.

The sale of Grindlays, very ably led by Elmer Funke-Kupper and the incomparable David Valentine, entailed the development of an IT services agreement for ANZ to support the systems until SCB converted to theirs. Four months negotiation & meetings in a number of countries got us over the line about a week before settlement date in September 1998.

Mike Grimes was Standard Chartered’s Global Head of Operations and led the IT negotiation from their side. Happily we did not come to blows as he later became my boss when appointed by John McFarlane as ANZ’s MD Operations and Technology after David Boyles. Mike passed on some time ago and I recall Mike fondly as feisty but fair.

Moving on to 1999….The lead up to Y2K was memorable in International. The Bank’s first business, and the first bank in the world to cut over (ignore Westpac), was Tonga which was on the CBS system. We were on tenterhooks in a control room in 55 Collins Street monitoring events across the division as the clock ticked over. Tonga ran its tests which went well and the CBS countries could relax.

In parallel with Y2K, another event unfolded. Our ANZ Nepal Credit Manager – Peter Ward, had been on his way home for leave when his plane was hijacked by the terrorist group of the day. The plane finished up in Kandahar for several days leading up to New Year’s Eve. He had a terrible experience not knowing if he was going to come out alive. In my then Head of Operations role for International, we had engaged an international rescue firm, to assist in extracting our man “when he became available”. After five days of phone conferences, at 10 pm on New Year’s Eve 1999, we got the call to say that the plane had been released – what a pleasure to make a call to Elmer Funke-Kupper to let him and the ANZ senior management team know.

A series of projects interwoven with operational roles followed including,

* Tasman - bring NZ’s data processing to Oz (travel to NZ) – now it is back in NZ

* Coordinating the Perform part of Perform Grow and Breakout

* DOT – a joint venture with OCBC for an online bank in Asia (travel to Singapore)

* Establish a Group PMO

* Hogan Core system upgrade (ANTS) completion

* Operations Transformation or Offshoring using an internally developed model (travel to India)

* Cash Management Program phase 1 (travel to the USA)

I would be the first to acknowledge that a couple of these projects did not go as well as planned for various reasons mostly “unknown unknowns”, however the ANTS team is still justifiably proud that the completion of that extremely high risk project was achieved with zero Sev1’s or 2’s in production after two major releases and 300 or so other changes which occurred through a two year period. During this time I had the privilege of working with some great colleagues including Tony Donohue, Jim Karvounaris, Graham Hunt, Glynn Parry-Jones, Peter Dalton and too many others to mention.

I leave you to conclude how successful I was in achieving my objective of reducing travel…..

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So all that said and hopefully with some of you still awake, we turn to the Bank and the current day.

I keep abreast of banking matters as I am sure we all do and I note the many challenges & opportunities present today including but not limited to digital disruption and the Murray review recommendations, and of course the Asian strategy.

What a pleasure it is to see the Bank seriously in Asia and the analysts finally getting that it could be a good idea. My compliments to Mr Smith and the current executive team on the progress being made and I am sure we all wish you well and outstanding future success in guiding the Bank forward.

So if you would now be upstanding - according to ability. And I would invite

you to join me in the toast to the Bank.

To the Bank….