The Bank dedicated to Aussie businesses has arrived

The banking industry, in fact the corporate world in general, is undermined by the very things that are supposed to drive it forward – that is, short term incentives (STIs), otherwise known as cash bonuses.

There is a fascinating experiment taking place in running a bank without bonuses, led by two former NAB bankers who have turned their backs on the STI culture: Joseph Healy and David Hornery. It’s called Judo Bank, a specialist SME bank started four years ago.

Judo pays only two forms of remuneration: salary and equity.

When I cite events critical of ­National Australia Bank in Breaking the Banks, some people might reflect that I was a senior executive there between 2007 and 2014, and ask what role I played and what responsibility do I take. These are legitimate questions.

During that period, I was on the group executive committee, the group risk management committee and the group asset and liability committee of the bank. I ran the business bank, NAB’s largest division which accounted for 50 per cent of the bank’s profits, in most of the years I was there.

During most of my time at NAB, I reported to chief executive Cameron Clyne, who I consider to be a person of high integrity.

I used to compare the NAB executive team’s banking experience to ANZ, which I knew well. There was no comparison. ANZ was headed by Mike Smith, an international banker who had spent much of his career at HSBC, and had within its ranks Phil Chronican, a career banker mainly at Westpac, Bob Edgar, who had been around the senior ranks at ANZ for decades, Shayne Elliott, who had extensive experience at Citibank and ANZ, and Graham Hodges, who was a seasoned banker.

While the global financial crisis exposed financial vulnerability, the “Australian financial crisis” - as Joseph Healy describes it in his new book - was one of legitimacy.

And this local crisis "of culture, purpose and social licence” will be tougher to solve than problems of liquidity, he suggests in Breaking the Banks (Impact Press).

Healy's offering comes after a flurry of banking royal commission-inspired books penned by journalists. But the career banker brings a different perspective. He’s an industry insider, but one who has broken away from incumbents (he's worked at NAB and ANZ) to co-lead the creation of one of Australia’s new banks, Judo.