NAB chief executive and chairman both resign after horror week

Dr Henry's appearance before the royal commission in December was widely criticised, and he said he had "relived that performance many times" he was "quite upset" about it, but he believed this was not the main reason for commissioner Hayne's remarks.

"I really wish I had performed much better, I certainly do," Dr Henry said.

Mr Thorburn said he had been speaking with Dr Henry this week, and he acknowledged the bank had "sustained damage" as a result of the royal commission's final report, which singled out both him and Dr Henry for stinging criticism.

“As CEO, I understand accountability. I have always sought to act in the best interests of the bank and
customers and I know that I have always acted with integrity," he said in a statement.

"However, I recognise there is a desire for change. As a result, I spoke with the Board and offered to step down as CEO, and they have accepted my offer."

Mr Thorburn said he did not harbour any bitterness over his departure.

"Today I have mostly been sad," he said.

It is highly unusual for a bank chairman and chief executive to leave at the same time, and Dr Henry said he would leave the board when a new chief executive had been chosen in order to "minimise disruption for customers, employees and shareholders".

Dr Henry said the board should have the opportunity to appoint a new chairman as it tries to "reset" its culture.

"I am enormously proud of what the bank has achieved and equally disappointed about what the royal commission has brought to light in areas where we have not met customer expectations. Andrew and I are deeply sorry for this," he said.

Dr Henry said the bank had been unable to meet consumer and community standards and he had reflected on that in making his decision.

Mr Thorburn said he had come to the decision to resign in the last 24 hours, and referred specifically to a page in royal commission report that said commissioner Kenneth Hayne was "not as confident as I would wish to be that the lessons of the past have been learned."

Mr Chronican said it had been an "extraordinarily difficult week for everyone involved", but the board would now launch a global search for a chief executive.

Dr Henry, who will remain on the board during the search "could take some months." He said he was taking the decision to step down because of NAB's "inability as a company to meet community expectations."

I'm sad to be leaving NAB in these circumstances, but it's absolutely the right thing to do, it gives NAB the opportunity to reset.

Ken Henry

"I'm sad to be leaving NAB in these circumstances, but it's absolutely the right thing to do, it gives NAB the opportunity to reset," Dr Henry said on a call with journalists.

Mr Chronican backed the bank's existing strategy to focus more on customers and regaining their trust.

"I recognise the important responsibility in stepping into this role at a difficult time for NAB,” he said.

The bank also released its first quarter profit result on Thursday, a day earlier than scheduled, showing a 3 per cent dip in cash earnings to $1.65 billion.

Mr Chronican, a former senior banker from ANZ and Westpac, will be acting chief executive from March.

The leadership upheaval comes after NAB suffered a horror year in 2018, with the royal commission exposing the fees for no service scandal, questions over alleged rorts by Mr Thorburn's chief of staff, a bribery ring in the bank's mortgage business and a record-breaking shareholder revolt against the bank's executive pay report.

Amid mounting speculation the royal commission's criticism could cost Mr Thorburn his job, the CEO this week dug in, insisting the bank had not been dishonest in a scandal that saw NAB collect $100 million in fees without providing service in return.

Mr Thorburn cancelled plans to take long service leave to deal with the fallout from the royal commission, and on Tuesday said he had the full support of the board.

Separately, Sydney Morning Herald and The Age reports on Thursday into suspected large-scale fraud by Mr Thorburn's former chief of staff had insiders describing a culture of largesse and extravagant spending in his office, putting his executive oversight in question.

Opposition Leader Bill Shorten said the resignation's would not assuage public anger at the banks and pledged to push for an accelerated response to the commission's 76 final recommendations.

"For Australians sitting at home tonight that have been victims of banking industry misconduct this news will be little comfort," he said.

"They don’t want to just see a couple of bankers kissed goodbye with golden handshakes. They want real change to cut the rot out of our banks."

Australians have a choice for the upcoming election. Only Labor can be trusted to clean up the banks. The Liberals will do nothing more than look after their mates at the top end of town.

Vas Kolesnikoff, head of Australia and New Zealand Research for Institutional Shareholder Services, said rest of the board should consider their positions.

"The other board directors should take a hard look at themselves," Mr Kolesnikoff said.

"You have to credit to Thorburn and Henry in that they resigned. There are other people including in management who have tarnished the bank."

Governance expert Dean Paatsch, who is chief executive of proxy advisory house Ownership Matters, said the resignations were inevitable. "It's an example of governance working as it should," Mr Paatsch said.

"It was excruciating to watch over the past few days but the right decision was made for them by the board."