Various columnists in the fishwrappers this morning have reached for the list of usual suspects to replace David Murray as the Commonwealth Bank’s CEO. I think they’re all wrong.
I’d bet reasonably heavily (say, $20) that neither St George’s Gail Kelly nor Suncorp’s John Mulcahy will take the job. Arguably the best candidate, Insurance Australia Group’s Michael Hawker, is definitely not a starter (I’d run as far as an outlandish $100 on that). Instead, I’d have a small flutter ($5) that the next head teller will be an internal appointment, just as Murray was.
Kelly and Mulcahy – both former CBA employees – have contractual obligations in their current jobs. But more importantly, I don’t think either of them is silly enough to want to move right now.
Kelly has St George purring along nicely with a lot of its success built on the fact that it’s not the CBA. The Dragon hasn’t reached its full potential yet and you’d think Kelly would want to find out just how successful she can make it. Running the Commonwealth would be much more difficult, not as much fun, and with comparatively more downside. Another couple of million in the pay packet wouldn’t be worth it.
Mulcahy has some similar reasons for staying at Suncorp, plus another big one – the bit that was missing from his promise on Tuesday that his company will outperform its peers: half of its business is in Queensland. The self-styled Smart State is recording economic growth of 4.25% this financial year and will do the same in 05/06, while Australia as a whole will be lucky to manage 2.5%. Queensland has 2% population growth, is enjoying the resources boom almost as much as WA, its slowdown in housing investment will be milder than in the south and, if anything does begin to go wrong in the next few years, the state government is building a fat portfolio of infrastructure projects that can be swung into action to maintain the lowest unemployment rate in the country. Suncorp management would have to be incompetent not to be able to outperform given such a base.
And there’s another thing: the CBA board might just want to show it’s not incompetent. The board is quietly defensive when the bank has been criticised for losing too many good executives and not having solid succession planning. If they have to appoint an outsider, they will prove that criticism correct – and who cares to admit to being incompetent?
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