ANZ boss Mike Smith is just oh so predictable. Like so many new CEOs before him, the English import has presided over his first profit result by painting a gloomy picture that will set him up for future glory.
The size of rotten loans is one of those flexible figures at banks and Smith has suddenly got all conservative, lifting the bad debt provision by 39% to $567 million. When combined with fears of a big Asian acquisition this contributed to ANZ’s share price slumping $1.15 to $29.96 yesterday.
Here is a list of other new CEOs who have painted their predecessor black with usually unjustified write-offs:
AMP: new CEO Andrew Mohl made the record books with a $5.542 billion loss in 2004 due to the UK disasters.
ANZ: when Don Mercer replaced Will Bailey as CEO in 1992 he cleared the decks and reported a $600 million loss due to a huge surge in bad debts.
AMP: For the year to December 31, 1999, AMP recorded a net loss of $403 million after new CEO Paul Batchelor took a $1 billion write off on its investment in GIO.
Adsteam: declared losses of $1.58 billion in 1990-91 shortly after founder John Spalvins was ousted by the banks.
Aristocrat: lost $106 million in 2003, after new CEO Paul Oneile wrote down the value of contracts and business operations.
BHP: Paul Anderson cleared the decks at BHP with a then Australian record $2.3 billion loss in 1998-99.
Davids Holdings: former Packer finance man Don Bourke came up with a $240 million loss in 1996-97.
Lend Lease: new CEO Greg Clarke announced a $715 million loss for 2002-03.
Mayne Nickless: Peter Smedley cleared the decks in 1999-2000 with a $174 million loss.
MIM: Nick Stump was recruited from Comalco and opened up with a $216 million bottom-line loss for 1994-95.
Orica: new CEO Malcolm Broomhead opened with a $195 million bottom-line loss 2001.
Sausage Software: with the likes of Steve Outtrim, Wayne Bos and Gil Hoskins out the door, new CEO Lloyd Roberts opened up with a $264 million loss in 2000-01.
Southcorp: John Ballard replaced Keith Lambert as CEO and came up with a $922 million loss in 2002-03.
With the benefit of hindsight, the least justifiable of these are Aristocrat and Orica, both of which subsequently blossomed. This sort of creative accounting is something that a good board should prevent and the ANZ directors are now looking silly for under-stating bad debts in earlier profit reports.
Meanwhile, I’d promised to stand for the ANZ board in this video criticising chairman Charles Goode last month but have now withdrawn after discovering that a respected former senior ANZ executive is running as an outside candidate at the AGM in Perth on 18 December. Should be very interesting to watch.
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