, group CEO of National Australia Bank (NAB), faced a series of cutting questions before the House Economics Committee on Friday.
Responding to a question on broker financial incentives by committee chairman and Liberal party member David Coleman
, Thorburn said he could see why they “would create distortions”.
He stressed, however, that NAB did not pay volume-based incentives to brokers, who were an “important group” for the bank.
NAB was waiting on the upcoming broker remuneration review from ASIC which it had assisted with, he added.
Rate change decisions
Labor committee member Matt Keogh asked how NAB set its home loan interest rates, saying it was “interesting” how quickly the banks had changed their rates after the Committee released its last report in November.
Thorburn said the executive committee and heads of customer business were both responsible for choosing how to set the bank’s interest rate.
NAB was monitoring this “all the time”, holding conversations every month on the topic, he said.
He reiterated that NAB did not fund its balance sheet on the official cash rate. However, the current financial environment came with its challenges.
“Our margins have halved and there’s continued pressure in home loans,” he told the committee.
Responding to a question from Greens MP Adam Bandt about the increasing price of housing in Sydney and Melbourne, Thorburn said this was a matter of supply and demand.
While he admitted that there were “increasing risks” with the ongoing surge in prices, he said that property in these capital cities was not overvalued.
Thorburn also revealed that since the last parliamentary enquiry on 6 October, NAB has uncovered 1,138 people within the bank who did not meet the required code of conduct.
“This follows a discipline review in every case by a specialist team that we have. The consequences for those people ranged from a formal warning, through to dismissal. It also involves a reduction or elimination of any bonus,” he said in his opening address.
There were five senior managers among those found not to meet this code of conduct. Two of these were dismissed while three faced disciplinary action.
“We also went back and looked at issues over the past two years, applied this standard and we’ve taken similar action against 48 additional people,” he said.
“Also, since we were here last we’ve made it a formal policy in the bank, that any prudential breach must be investigated by a dedicated and specialist team.”
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