The Australian
February 1, 2019

Former ANZ chief executive Mike Smith has slammed Brexit as a “complete and utter disaster” for Britain while praising Donald Trump for “putting a firecracker” under the US economy.

British-born Mr Smith, who ran ANZ from 2007 to 2015 and implemented its controversial super-regional strategy, lamented the lack of vision among the nation’s politicians, contrasting Australia’s tax-and-spend policies with a simple lesson in economics delivered by President Trump — the extraordinary power of tax cuts and accelerated depreciation.

“The amount of investment created has led to probably the biggest growth in jobs in US history,” he said in a podcast hosted by the executive search firm Blenheim Partners.

“You listen to our politicians talking about increased government spending and tax and wondering why the economy slows and job creation isn’t there. Well, hello? Look what you can do with very simple economics.”

Mr Smith was sanguine about the trade war between China and the US, saying that China was a pragmatic nation and would do what it could to close a deal.

President Trump, on the other hand, had a very different national agenda, and what he said and did were often “slightly different things”.

“Trump is a difficult one to read,” the former banker said.

“I think that’s what keeps him in office, almost.”

Since leaving ANZ, Mr Smith has embraced the fintech sector and innovation, becoming chairman of the business incubator YBF Ventures.

His successor at ANZ, Shayne Elliott, has partly dismantled his former boss’s legacy, retreating from some of the region’s markets and shrinking the balance sheet in pursuit of higher returns.

Mr Smith was highly critical of the short-term investment horizon of analysts and fund managers, whose idea of long-term extended as far as “next Thursday”.

A meaningful Asian strategy, he said, was never going to be realised in 5, 10 or even 15 years.

With the market now effectively dictating the strategies of the major banks, it was inevitable that they would converge.

“You will get stagnated growth and lower returns,” he said.

“The media is very much to blame for this because they like to quote these analysts who have never done anything themselves.

“Yes, they whack you around — you have to have a thick skin and fortunately I do.”

If he had a regret from his eight-year period as ANZ CEO, it was a failure to anticipate that regulation would change so rapidly, particularly the “obsession” with more capital when it was always liquidity shortages that caused bank failures.

The complexity of regulation became the issue for ANZ, and it would be difficult to rush back into Asia. In any event, it was now someone else’s turn — Mr Elliott — to “run the train set”.

As for Brexit, opportunities loomed for Australia but not for Britain.

“The (British) government is completely stuck in terms of being able to do anything, and the whole process of government has come to a grinding halt,” Mr Smith said.

“They’re trying to create a Brexit deal on the run but they’re dealing with Europe, which rather than being facilitative and thinking that the UK is actually the second-biggest economy in the EU, is putting its head in the sand and being difficult, possibly for historical reasons and old prejudices,” he said.

“This has been a complete and utter disaster. I get some of the nationalist feeling, and I get some of the wanton waste that the EU has created and some of the stupid regulation. But it’s much easier to change things when you’re inside the tent instead of outside.”

Article by Richard Gluyas, Business Correspondent


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