If there is one figure that summed up why the National Australia Bank is cutting thousands of jobs in Australia, Britain and Asia, it’s the cost-to-income ratio in the banking division, the heart of the country’s biggest bank. According to today’s interim profit statement, it was 57.4% on March 30 – and that’s just too high. It’s even higher than it was last September, at the end of the bank’s annus horribilis when the ratio was 57.1% thought to be unsustainable.

When you compare these figures to the 50.8% ratio recorded at the end of March 2004 you get the full picture – in a very short space of time NAB has become a fat, poorly performing giant. It’s no wonder 2,000 jobs will go in Australia. The cuts have gone down well with investors, and the actual profit, while down, is not as low as some had expected. So the shares are up – by 11am this morning they were up to $30.20 and heading towards the year-high of $30.98.

The people going are the innocent victims of an incompetent management and board. Former CEO Frank Cicutto has gone, along with many other executives, and in September chairman Graham Kraehe will finally depart. But somehow it seems very unfair that so many people are going to be retrenched simply to right the problems that were allowed to emerge under the watch of people like Cicutto, former chairman, Charles Allen and Cathy Walter.

All the NAB’s competitors have their cost-to-income ratios under control. ANZ, Westpac and St George all have their ratio well under 50c in the dollar. And the ANZ is actually trying to grow the business by opening more branches.

NAB CEO John Stewart details the changes to boost performance by re-organising the back office, slashing middle management, and cutting back in Asia and in Britain. The whole spiel is in fact a long mea culpa.

It’s clear the UK banks have been run inefficiently, the Asian expansion was not well thought out, and the corporate centre was allowed to grow, along with back office functions, to a point where their financial weight dragged down the whole bank. But can the $34 million dollar man, Ahmed Fahour, turn it all around? With his lack of coal face experience, you’d be entitled to be sceptical.