The first Blog for the year is a little different to what I had planned. But when I saw the Bank of New Zealand announcement last week about the departure of its current managing director I changed plans.
Peter Thodey is leaving the bank after 27 years to take up a role with BNZ's parent company, National Australia Bank.
Ho-hum you may think. Well I suspect many people in the mortgage industry will be watching with interest and possibly a little glee.
Thodey has been credited, rightly or wrongly, as the man behind BNZ's aggressive home loan marketing strategy which has included chopping out brokers and also "discounting" rates.
There has been a view held that once he leaves BNZ the strategy may change. That would clearly find favour with other banks as they argue BNZ's strategy has cut margins on home loans to unsustainable levels.
Sure the BNZ's strategy is good for consumers, but not shareholders of banks, nor I suspect, the Reserve Bank which wants to see things, particularly in the housing market, slow down a little.
As the cliché goes, the jury is still out on the strategy. BNZ says it has worked for them, however it doesn't appear to have made huge change to their market share. Also there is still much conjecture over which is the cheaper distribution channel; mortgage brokers or mobile managers who are essentially bank employees.
I don't know the answer to the latter question, but I am sure the banks do. While that is a point which gets a lot of air time in the mortgage industry, it is fair to say that running both channels can be expensive, especially for smaller banks. That is part of the reason HSBC no longer use brokers and others like Kiwibank stick to their one channel approach.
Here at Good Returns we have been told about Thodey's alleged dislike for the broker channel, however attempts over the years to interview him on the subject have been unsuccessful. Maybe an exit interview will be granted?
For the record Thodey is taking up a role as executive general manager National Australia Bank's head office in Melbourne. He will be replaced by Cameron Clyne, who is currently executive general manager group development, NAB, and a BNZ director.
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