By Stuart Ridley
Photo Graham Jepson

There was a time when walking into a big bank felt much like entering a mausoleum or another monumental building that projected power, wealth and permanence. Today, Westpac’s HQ at 275 Kent Street in Sydney looks more like a modern art gallery than a fortress of finance. It has its own calm, confident power, but it’s not intimidating. And its openness feels reassuring, particularly in these strange pandemic days.

“Here, let me help,” suggests Michael Rowland FCA, Westpac’s chief financial officer, as I struggle in with a bandaged right hand I busted during a recent ice hockey game. The stupid injury I’d hoped not to draw attention to turns out to be an icebreaker (no pun intended). Rowland uncovers a gnarly kneecap, which looks like a shark had a go at it.

“I have done a lot of ocean swimming with a group called the Walkerville Walruses in South Gippsland, but no, this wasn’t from a shark,” explains Rowland, who took up the CFO mantle in the second half of 2020.

“I’ve broken my patella and torn a few other things playing footy – Aussie Rules – and one problem with the game is there’s a lot of twisting and turning. The last time, I did my posterior cruciate ligament which at my age they don’t fix, so there’s bits still wandering around in there.

“It’s just a bit messed up, but it doesn’t bother me much,” he continues. “The orthopaedic surgeon asked, ‘Can you still walk?’ Yeah. ‘Can you still ride?’ Yeah. ‘So, keep going!’” he says. “I just love sport – always have – and I don’t plan on stopping; I’m just being more careful now.”

Picture: Michael Rowland FCA.

"I just love sport – always have – and I don’t plan on stopping, I’m just being more careful now."

Though he won’t be sprinting down a footy field any time soon, he relishes a few hours of cycling each week with friends on weekend mornings.

“We’ll do 60 kays, have coffee and a chat, then I’ll go back to work,” Rowland says. Wait. He’s working every weekend?

“It’s a full seven-days-a-week job, but I knew that about the job coming into it, and I’m not upset about it. It’s the nature of the job.”

First steps into accounting

The first time someone called Rowland about a job opportunity he was 18 years old and frankly didn’t think he was up for it. He’d had his heart set on a long summer holiday after finishing Year 12 in the late 1970s, but his father had other ideas.

“I was on the beach with friends down at Lorne [on Victoria’s Surf Coast] and Dad turned up saying ‘Get in the car and come back to Melbourne – you have an interview as a trainee accountant’.”

The interview was with Bell Bryant in Kensington, which makes industrial-sized steel containers such as beer vats. It was hardly something an 18-year-old wanted to get involved in, and the guy doing the hiring – Colin Brown – knew it. “He said ‘Look, I know you’re not that keen, but you’ll have a great start to your career. I’ll teach you to be an accountant and, by the way, we’ll pay you some money’, which was somewhat attractive at the time.”

During his first year juggling studies at the University of Melbourne and working part time, Rowland met some smart people who profoundly changed his perception of the profession. Bell Bryant’s auditors and tax advisers were from Peat, Marwick, Mitchell and Co., a firm that later merged as the ‘PM’ in KPMG. One thing that struck him about the auditors was they were very focused on helping their clients – not just in getting the auditing and tax advisory work done, but in proactively finding ways to improve processes – and the bottom line.

“I got on well with them and I felt they had a real sense of purpose about what they were doing,” Rowland recalls.

“So, towards the end of uni at one of the career days, they used to set up basic little stalls and you could go around and do interviews with the eight different chartered accounting firms. I went in there wearing shorts and a T-shirt and said ‘I’m just going to work with Peat, Marwick, Mitchell and Co. because they’re great people. So that’s how I got into chartered accounting.”

From CA to CFO

The capabilities Rowland developed as part of completing the CA Program – writing 5000-word assignments by hand, hosting presentations, sitting two three-hour exams – continue to serve him as a CFO. The importance of prioritising, really understanding the facts and the rules that apply, being really clear on the outcome and having the resilience to put the work in and solve a challenge are essentials in his role.

“The other thing that the professional year taught us early was the power of working in teams. Firms are bigger now so teamwork is even more crucial.” 2020 was already set to be a watershed year for Westpac, even before the pandemic tore into any notions of ‘business as usual’. The bank had started the decade with a heavyweight talent acquisition campaign to build a strong, stable executive team, after several senior leaders left the bank in the fallout of a 2019 money-laundering scandal. Charges by financial intelligence agency AUSTRAC that Westpac had committed 23 million breaches of Australia’s anti-money laundering laws saw the bank hit with a A$1.3 billion fine. Westpac CEO Brian Hartzer stepped down in November that year, and chair Lindsay Maxsted brought forward his retirement to March 2020.

The first big appointment in the changing of the Westpac guard was in January 2020, right at the top. The new Westpac chair would be veteran banker John McFarlane OBE – lauded for revitalising ANZ’s performance in the 2000s when he was CEO. McFarlane was persuaded to return to Australia from the UK where he had retired as group chair of Barclays in 2019 after a little over four years in the role and served as president of the International Monetary Conference (the annual conference of the heads of the world’s banks).

Next, Peter King FCA was promoted from Westpac CFO to Westpac CEO at the beginning of April 2020. King then headhunted his fellow chartered accountant Rowland from KPMG, where Rowland had advised banks as a senior partner specialising in consulting to financial services. Rowland came highly regarded and had already worked under McFarlane in senior positions at ANZ and ING Australia.

“Michael’s experience is broad across both CFO and business leadership roles,” stated King in a Westpac Wire news release on 14 July 2020.

“His most recent experience in consulting as a senior partner at KPMG also brings valuable external perspectives – in particular, Michael’s expertise in business restructuring, delivering sustainable productivity and revenue programs and in disciplined financial management will be an important contributor to making Westpac a simpler and stronger bank.”

Seeing a problem and solving it

Certainly, this isn’t the first time Rowland has been hired to help a financial institution strengthen its position. In the early 2000s he served as a CFO in several capacities for ANZ: first as CFO – Personal Financial Services, next as CFO for ING Australia following the ANZ-ING joint venture in 2002, and then for a few years from early 2004 as the bank’s CFO across the Tasman after ANZ acquired the National Bank of New Zealand.

As part of the transaction, the regulator in New Zealand had put some drop-dead dates on when the two banks had to be merged. “But when I got there, I worked out pretty quickly that $50 million had been spent on integration – and not much had been delivered,” Rowland says.

“So, I got some of the folks together in finance, found out why progress hadn’t been made (for a lot of reasons, which I won’t go into), and we said ‘Look, we need to get the work done: there are major financial risks if we don’t meet our conditions of registration.’ We identified several options and presented a recommendation to the board to get things going.

“As a result, my job became to not only be the CFO for the combined bank, but to head up the integration of the two banks. That wasn’t just people integration – it was systems, the whole organisation, leadership, the whole thing.

“We worked very hard, but we got the integration done on time and on budget, which shows the importance of using financial disciplines and approaches to problem solving to get a really good business outcome.”

Creating sustainable value

Rowland acknowledges big banks must work harder than ever to gain and keep their customers’ trust, particularly when answering questions about how their money is being managed.

While most people are willing to accept some financial risk in their investments, the groundswell of customers calling on banks to address climate change risks has made the issue massively mainstream.

The intense scrutiny of corporate citizenship – and the stewardship of nature – is now reflected in financial institutions’ investor updates and annual reports, which include details on the environment, social and governance (ESG) criteria they apply to investments.

Westpac’s 2020 annual report – titled “Fix. Simplify. Perform.” – notes the bank has loaned A$10.1 billion to projects involved in climate change solutions. Its Climate Change Position Statement and 2023 Action Plan, updated last year, states five key principles, including that climate-related risks are financial risks.

In May 2021, the bank announced it would no longer offer loans to new borrowers in the oil and gas sector unless they could show their operations aligned with reducing emissions set by the Paris Agreement. Westpac’s existing clients in the sector would also need to show a path to decarbonisation.

On a retail level, in June last year Westpac NZ launched its Warm Up loans to home loan customers. The loans are to help Kiwis make their homes warmer and healthier by offering up to NZ$10,000 interest-free for five years to buy heat pumps, solar panels, ventilation, double-glazing or insulation. It also aims to create work for tradespeople affected by the COVID-19 downturns.

“Westpac has been very conscious of its sustainability obligations for more than 20 years and is committed to helping customers respond to climate change,” says Rowland. “So, as far back as 1996 we started reporting on climate-related metrics. And today, Westpac is the largest lender in Australia to new renewable energy projects – such as wind, solar and hydro – that support the transition to a net zero emissions economy by 2050.

“Renewables now represent three-quarters [75%] of our lending to the electricity sector [up from 59% in 2016]; and we also recently issued a €1 billion green bond. [Issued into Europe, the green bond is the bank’s fifth since 2016. Its proceeds will go to financing or refinancing sustainable projects.]

“We’re very conscious of our social licence to operate as a major Australian bank and I think as the broader economy progresses down this track, small, medium and large businesses will find opportunities to generate economic value by transitioning quicker than they would otherwise.”

Ethics is a cornerstone

Whether it’s leading on ESG or delivering sustainable productivity for the bank, Rowland believes good decisions are born from diverse leadership.

“We’re all brought up with inherent biases in how we think about things,” he says. “And what I have found over the years is the value of diversity in teams. Everyone brings different contexts and perspectives to a situation, so empathy and inclusiveness are really important for making good decisions.

“Empathy and inclusiveness are really important for making good decisions.”

“The integrity and ethics you carry around with you have to be the cornerstone of how you operate.”

Rowland believes some of the challenges around flexible working, such as ensuring staff feel connected, are making leaders think more deeply about how they motivate their teams.

“I know people talk about ‘soft skills’, but I think you get the best outcome by working well with people. These so-called soft skills are becoming more important as the days of working five or more days a week in an office appear to be in the past.

“I think what really helps is the new executive team here gets on and we work well together,” says Rowland of his seven-day work ethic. “Everyone’s clear on what we need to get done.”

Picture: Michael Rowland FCA.

“The integrity and ethics you carry around with you have to be the cornerstone of how you operate.”