Watson: the meaning behind leading

That’s something I’m extremely proud of, it’s testimony to the history and the culture of this bank and the quality of the people who work here.

“I strongly believe being a leader doesn’t mean giving orders. It’s more about understanding what is in the common interest and helping guide people to make the right decisions.”

But it is also an enormous responsibility. Such a large organisation, which employs around 8,000 people and touches the lives of about one in three Kiwis, is fundamental to the vitality of the New Zealand economy. It also has a deeper role than simply delivering earnings to shareholders, as important as that is.

At ANZ our purpose is “to shape a world where people and communities thrive” and that directly informs our strategy of building the financial wellbeing and sustainability of our customers and their businesses. If we serve that purpose and deliver on that strategy we will provide more sustainable returns to our shareholders. But it also means, given our profile here, setting an example.

The Kiwi dream

This last 18 months has obviously been particularly challenging, even in New Zealand where the COVID-19 pandemic has generally been managed as well as anywhere in the world. It has been economically challenging, not just because of COVID-19 but because of structural forces in the economy, notably the surge in house prices.

Planning regulations, a lack of infrastructure investment, the cost of building supplies, poor workforce planning, historically low interest rates and a lack of alternative investment vehicles for those with spare cash has seen demand outstrip supply of houses in New Zealand.

ANZ and other banks have seen record mortgage lending since COVID-19 arrived, making the Kiwi dream of home ownership less attainable for the young and those on lower incomes. Many investors, in particular, entered the market looking for capital gains tax free returns.

When this happened in the past, the Reserve Bank of New Zealand tightened criteria around residential investment lending. That was effective and this time speculation had centred on raising the deposit for investors to 30 per cent to help dampen demand.

But we didn’t actually think that was enough. We thought it needed to be 10 percentage points higher to have the desired impact so we put our money where our mouth was and raised the requirement to 40 per cent. That did cost us some business initially but, as the market leader, we saw that as the right thing to do for the country. I’m proud to say it did take some froth out of the market and made it easier for owner occupiers to buy.

A housing market where more Kiwis can afford a home is a better housing market and ultimately better for our economy – and ANZ. Getting more Kiwis into quality housing is a strategic goal.

Being the conductor

I strongly believe being a leader doesn’t mean giving orders. It’s more about understanding what is in the common interest and helping guide people to make the right decisions. Gone are the days when leaders have all the answers because in this complicated world, no one can have them all.

I believe in surrounding myself with smart people and letting them flourish by being the conductor.

Another facet of personal and corporate leadership involves values. I believe we have an obligation to set ethical and behavioural standards.

We are a leader in diversity and inclusion at ANZ, notably with gender equality, but we must always question how we can take that to the next level. It makes sense morally and from a business perspective.

As a customer-focused organisation we need to look like and understand contemporary New Zealand. But the broader and more diverse world views we bring to the decision-making table the better the chance we end up with good outcomes for our customers, staff, shareholders and the country.

Can’t be what you can’t see

At the moment I think we’ve become a bit complacent. At ANZ about 37 percent of our leaders are women, so we need to keep improving there. But there are also far too few Maori, Pasifika and Asian team members in those roles. And you can’t be what you can’t see.

We’ve got to think differently about diversity and inclusion. Thousands of New Zealand women, Maori, Pasifika and Asians – a rapidly growing number – have overcome the odds and achieved great success in all fields; from business to the arts to science and sports. This is the new normal and it’s good for us all. ANZ – and others – need to catch up.

That’s why we've hired a Head of Diversity and Inclusion and a Head of Te Ao Māori (Maori world) Strategy. Our Head of Te Ao Maori will help us bring better Maori representation into the bank and into senior roles. It will also help us work better with Maori businesses, Maori suppliers and help make our staff more comfortable and culturally competent.

We've been very strong in Maori business for years and we work very closely with many Iwi (tribes). We do a great job but it’s mostly based on us being a great bank – providing good banking solutions, great pricing and helping them grow like many other businesses we support. Now we must deepen our relationships with them to understand their world view if we’re both going to flourish.

My feeling is in recent years many New Zealanders and businesses have yearned to better understand Te Ao Maori, to have a basic understanding of Te Reo Maori (the Maori language) and Tikanga Maori (Maori culture).

A lot of this has been driven by young people. Our future customers and staff and their enlightened views have forced institutions and big companies like ANZ to change and that’s a good thing. I’m encouraging our leaders at ANZ to recognise that shift and do more.

This blends into the vital role we play with climate change and sustainability more broadly. A lot of first nation cultures have much more long-term planning and environmental management embedded in them. Maori have a great term for this: Kaitiakitanga or guardianship and protection. That idea of managing resources for the long term is central to ANZ’s strategy of building the wealth and sustainability of our customers.

Playing a leadership role

We obviously play a more direct role in working with our customers to manage climate change. Our Chief Executive Officer Shayne Elliott has discussed our work with our 100 largest carbon emitting customers and our long-term plans to manage the transition to a lower-carbon world. Twenty of those customers are in New Zealand and we’re working with them, plus a few more.

We have two roles really. The first is helping our customers fund the transition to a lower-carbon world. The second is we have the ability to gather a lot of data and give advice on carbon footprints and other factors. In the agri sector, again where we are the market leader, we can work with customers on simple things like tree plantings or waste management. But real sustainability is more achievable with good data that can be turned into action plans. We can play a leadership role and help answer what the path to carbon neutrality looks like in practice.

Lending to the dairy industry is a clear example. In some past cases banks, including ANZ, lent to farmers to convert land not suited for dairy farming. We stopped that some years ago and now require proper land use and environmental plans.

Helping farmers transition to the new world makes their businesses more sustainable, lowers our lending risk and is better for New Zealand.

Missing the point

Our leadership in these areas is not always welcomed. We’ve been criticised for not sticking to banking, being woke or using shareholder funds for the wrong purposes and to push agendas.

But that misses the point that the sustainability of our earnings - our returns to shareholders - depend on these agendas. If we misprice risk due to climate change it costs us. If we don’t recognise the worth of diversity, we won’t attract the best staff. If we don’t recognise our broader role as a leader in New Zealand, we risk our social license to operate. We risk conduct fines, we risk more onerous regulation and the management distraction that would entail.

I’m a bit of a numbers nerd, being an accountant by training. I love looking at balance sheets and understanding the financial engineering. But in my career I’ve been lucky enough to move from accounting into banking, initially with Morgan Stanley, and move from finance to the business of banking in Britain, Australia, Hungary and New Zealand. I’ve had responsibilities across HR, Property, Corporate Services, IT and Operations.

At Morgan Stanley I started one of our business service centres from scratch and that meant embedding culture and purpose from day one. I understand the financial worth of a values-based culture for the bank but also for those communities in which we operate.

Our position in New Zealand means we can contribute directly to the management of the economy, particularly with COVID-19. During the lockdowns we’ve been able to share our data with ministers and officials. As the biggest bank we had the most up to date detail on what was happening in the real economy.

Increasing value, building resilience

So when I look at our strategy I appreciate the complexity and depth of what it means to improve the financial wellbeing and sustainability of customers. We do that by providing relevant, efficient and connected services, tools and insights that engage and retain customers and positively change their behaviour. We do that better than our competitors – and in doing so increase value for shareholders.

Behind this is the idea of building resilience, which we’ve seen to an extraordinary degree during COVID-19. The courage in our communities has been inspiring and the benefit of our financial strength has been the capacity to help build that resilience.

Behind every story of resilience is an individual – someone getting on top of their personal finances or a business shifting direction and re-engineering in a rapidly changing world. Resilience is vital for us all.

I didn’t come to this job in ideal circumstances. My predecessor left after there were financial matters that weren’t in keeping with the values of ANZ. But I was not an outsider and there was a period of intense, even aggressive, doubt about my fitness for the role. It made me profoundly aware these roles require more than technical expertise.

I think I have good genes for this challenge. I have a photo in my office of my mother being admitted to the bar as a solicitor in the 1960s – a sole woman in a sea of men in dark suits. My parents have been staunch supporters of my sisters and I in whatever we pursued.  They taught us the value of hard work and to see barriers as something to hurdle.

So in that fraught period while I was acting Chief Executive waiting for my role to be approved by regulators, I saw how important resilience and values are. With leadership the buck stops with you. You’re the one everyone looks to so you must have belief in yourself, inner strength and conviction that you’re on the right path.

You can’t expect others to back you if you don’t back yourself. That’s true for me personally but it is also true in a much wider sense when your business is a leader in a market or a country.

Antonia Watson is Chief Executive Officer of ANZ New Zealand