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No straight answers from NAB testimony on bank closures

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From left: NAB retail executives Mil Kairouz and Krissie Jones at the recent Senate Inquiry (Image supplied)

National Australia Bank's recent testimony at the Senate Inquiry into bank closures in regional Australia – that it is "committed to being where its customers are" – is misleading. Dale Webster reports.

BEING HELD in contempt of the Senate is a pretty easy thing to get your head around.

Witnesses at hearings who give false or misleading evidence run the risk of being hauled in front of the privileges committee for a “please explain”. If an individual or corporation is found to be in contempt, the committee has the power to impose substantial fines or even terms of imprisonment. To date, the Senate has not gone down this track but has accepted apologies and remedial action.

On 2 March, the first hearing of the Senate’s Rural and Regional Affairs and Transport References Committee Inquiry into bank closures in regional Australia was held in Sale, Victoria.

One of the witnesses called to give evidence was the National Australia Bank (NAB), represented by retail executive Krissie Jones and retail executive for Victoria Mil Kairouz.

NAB was asked to appear along with Westpac due to two planned closures in the regions of Sale (Westpac) and Maffra (NAB).

Even before the hearing had got underway, the Australian Banking Association’s chief executive Anna Bligh had fired an opening salvo for NAB through an ABC story posted online that morning.

About the planned Maffra closure, the ABC reported:

'Cash withdrawals had declined to just 418 for the whole of 2022 at the branch in the town. NAB's data said only 59% of its Maffra customers went to the branch during the past year. Just 11 customers visited more frequently than once a month.'

Bligh said:

"That's not people leaving town; that is people in town transforming the way that they bank. In fact, Maffra's population has grown, so the town is not in decline. But the people in Maffra changed the way they banked during COVID. And they're not going back."

Customer behaviour during and after COVID lockdowns and the impact this had on the decision to close the Maffra branch was the subject of questions put to Jones and Kairouz by Senator Richard Colbeck.

Senator Colbeck asked whether NAB had seen any movement back to face-to-face banking rather than digital, post-COVID, “not just in regional areas but more broadly”:

“I've been looking at some of your numbers for Maffra and they are quite low in 2022, but as people start to move again, have you seen any change in your stats?”

Jones deferred to Kairouz to speak specifically about Maffra figures but said – in reference to metropolitan and regional areas in general – that *declines in foot traffic experienced at all branches during COVID lockdowns were continuing.

Said Jones:

“The decline has continued and the change has continued… there's been this really consistent shift in all of the ways our customers are banking so it hasn't stopped since we've ended lockdowns and the response to COVID.”

The numbers Colbeck referred to were from a fact sheet released by NAB when the Maffra branch closure was announced.

NAB has been releasing “impact assessments” since September in response to recommendation two of the Regional Banking Taskforce final report. (An ineffectual requirement for banks to explain the reasons for the closure and how they will engage with customers and other stakeholders after the decision to close a branch has been announced.)

Other than telling customers how far they will now have to travel to do their banking, NAB’s fact sheets are of little value. However, they do provide an insight into bank activity at branch level that has never been available before.

And some of what has been published so far appears to contradict Jones’ evidence.

The fact sheet for the closure of the Pitt-Hunter Street branch in central Sydney on 23 March due to a building redevelopment, for example, shows business banking deposits significantly bounced back by the end of 2021, increasing 70% on the 2020 figure. Personal banking cash withdrawals had also fallen in 2020 but grew 38% by the end of 2021, with cash deposits growing by 16%.

Similarly, another metropolitan branch at Floreat in Perth showed recovery in 2021 after a decline in both personal and business transactions in 2020.

Regionally, Alexandra in North East Victoria, which NAB is closing on 4 May, has seen a significant rise in business transactions, growing 5% between 2020 and 2022.

At Kings Meadows, also closing on 4 May, personal banking transactions last year exceeded 2020 figures, with personal banking customers coming into the branch more than three times a week in greater numbers than the busy branch in central Sydney.

Business banking at the branch NAB is closing at Belmont in Geelong on 30 March, had climbed back 78% on 2020 figures by the end of 2021; personal banking saw a 63% recovery. (No 2022 figures have been provided.)

Bombala, which closed on 8 December, saw a whopping 98% increase in business banking from 2019 to the end of 2021 — not even slowing for COVID in 2020.

It was a similar situation at Forbes, with 93% business banking growth between 2019 and 2021. Business banking at Dysart, Tin Can Bay and Longreach was also in recovery by the end of 2021.

While not all the data in fact sheets for branches the NAB is closing is as positive, there is one key piece of information that Jones and Kairouz did not disclose to the senators or Anna Bligh to the ABC — 45 regional branches closed by NAB since the start of 2021 had their opening hours drastically cut at the end of 2020.

  NAB branches that cut hours in 2020 — those closed since marked in red (Image supplied)

In every case, NAB blamed the closures on customers not coming into the branch as often as they used to and took no responsibility for the behaviour change.

With doors being locked just after noon, however, workers who would usually do their banking during their lunch break could no longer access the branch and it was not open at the end of the day when businesses normally bank their day’s takings.

At Maffra, the impact of reduced opening hours was also compounded by staff shortages in 2022 which meant the branch could often not even open its doors for the few hours it was obliged.

The staffing difficulties were disclosed by Kairouz at the hearing but he omitted to tell committee chairman Matt Canavan – when he asked whether the branch was still open –that while the official closing date was not until May, the branch was listed as “temporarily closed”.

According to local sources, it has been at least six months and possibly almost a year since customers have been allowed through the doors.

Combined, all this means that customer access to the Maffra branch was extremely poor across 2021 and 2022 and that the data quoted by NAB and Bligh for 2022 could have been from as low as just three months’ trade.

In reality, all that is left for NAB to do at Maffra is pull the signs down and clean out the office, including picking up the mail that has been piling up under the door for months.

When this happens, it will mark the official closure of another “ghost bank”, a phenomenon described by a witness later in the hearing where branches have staff, hours and services reduced to such an extent that they are barely there.

In these situations, customers have no choice but to mostly bank in bigger centres because they can’t get in the doors of their local branch, only to be blamed later for the closure because they have had to go elsewhere or use other service channels.

It was particularly disturbing to hear Jones attempt to push this line even further during the hearing when – answering a questions put to her by senators Gerard Rennick and Peter Whish-Wilson – she flipped long-established, researched-backed facts that the closure of a bank drives people to larger centres to do their banking and while there they also do their shopping and other business.

Citing no evidence to support her statement, Jones told Senator Rennick that the opposite was occurring and that branches were being closed because people were leaving the towns to shop and do other business, and this was the cause of foot traffic dropping at their local branches.

Said Jones:

The way our customers are banking has dramatically shifted. We have seen a reduction in our foot traffic into branches of about 66%, so, significant change. So the way our customers are doing things is different. In regional towns, we are seeing people who might have previously banked in a small town travel to a place like Sale to undertake their shopping, to visit the mechanics, to see the doctor and it’s at that time we also see them doing their banking.

She said the same thing when asked by Senator Whish-Wilson whether NAB’s decision to close branches was for profitability reasons:

"I think what we are doing it for is really to be where our customers are and unfortunately, the truth of it is, many of our customers are going to other locations to do their broader … do their grocery shopping, as I said to see the doctor… and so we need to be in the places where our customers are going to be."

The evidence being presented did not improve from there.

There was some very slippery testimony over the consultation NAB says it carries out when deciding to close a branch, prompting Senator Canavan to declare that NAB’s use of the word “consultation” was “an abuse of the English language”.

This followed Jones initially telling the senators:

“We do inform the mayor of that decision as well as MPs.”

She later admitted under questioning that MPs were only told the day before a closure is announced and mayors at the same time customers receive the news.

Jones' use of the closure of the Murgon branch as an example of good consultation, where she said the bank worked “with local stakeholders to make sure our approach was nuanced for Murgon”, contrasts dramatically with the situation reported by local media at the time.

Southburnett.com.au reported:

'Shocked customers learned the news – which has been confirmed by NAB – when they entered the branch on Wednesday. Murgon Business & Development Association (MBDA) president [the late] Mark Smith said he was disgusted with the decision and the way customers learned about it.'

Said Mark Smith:

“It was very, very poorly delivered. I walked into the branch yesterday morning to do my banking and they said the branch was closing."

Informed Southburnett.com.au: 

'Mr Smith said he had already contacted the offices of Member for Nanango Deb Frecklington and Member for Wide Bay Llew O’Brien to alert them to the closure.'

Mark Smith said:

“I am still in shock. I can’t believe that such a player, after the support that Murgon has given NAB, would do something so horrendous.”

Former MBDA president and local businessman Leo Geraghty also said he was disgusted:

Said Geraghty:

“Just a week ago, I made an investment with the NAB and there was not a word then.” 

Member for Nanango Deb Frecklington confirmed that she did receive a letter from NAB the day before this story appeared informing her of the decision to close the branch, but she said she never heard from NAB on the issue again.

Member for Wide Bay Llew O’Brien said he was not informed of the closure by NAB.

Senator Canavan said:

“It seems like a tick-a-box exercise and I applaud you and welcome the fact that you are doing these assessments while others aren't but it's really just a spreadsheet without a lot of local knowledge.” 

NAB’s testimony went for an hour, going 30 minutes over time as the senators attempted to get some straight answers.

A question from Senator Rennick about whether business banking transactions had also been declining as well as personal banking – an opportunity for the increase in trade at Alexandra to have been disclosed – went straight through to the keeper, with Jones explaining instead how business banking could be done at post offices.

The session concluded with an exchange between Jones and Canavan in relation to the Committee’s request for all banks to pause closures in regional areas while the Inquiry was in progress.

NAB has refused outright to comply, but what Canavan and other Committee members were probably not aware of at the time is that when NAB executives were sitting in their place as members of the Coalition’s Regional Banking Taskforce, they reversed decisions to close four branches after being invited to take part in an official capacity.

Maffra, Tocumwal, Berry and Sussex Inlet branches were on the chopping block as far back as October 2021 (something their customers may not have been aware of) but the decisions were reversed in early November that year just after the task force was announced.

With Maffra and other closures back on the agenda now and the subject of much discussion at this hearing, this is, again, information that probably should have been disclosed by Jones when asked about the moratorium.

Instead, she drew on her ample supply of key messages and laid bare NAB’s agenda under group chief executive Ross McEwan’s leadership.

Jones said:

“We are committed to investing in regional Australia and we are reshaping the network to be where our customers are.”

Senator Canavan pressed her further:

“Have you or anyone had a discussion with the CEO of NAB about the Senate Committee’s request to pause these closures?”

Jones replied:

"Yes, I have."

Senator Canavan:

"And the CEO has rejected that?"

Responded Jones:

"Our CEO is committed to making sure we are where our customers are."

A moment later, Jones added three regional closures to six pending ones of which the Senate Committee was already aware.

Branches at Bunbury, Kings Meadow and Roxby Downs join Alexandra, Clifton, Longreach, Belmont and Maffra on death row. (Barraba closed on the day of the hearing.)

The nearest bank to Roxby Downs is at Port Augusta, a six-hour round trip by car that even NAB knows is unacceptable — the bank removed any reference to the distance from its standard closure fact sheet template so as not to draw attention to it.

Every one of the branches NAB is planning to close in coming months still has customers – good customers – who support NAB through both personal and business banking.

Many are likely to have banked with NAB for decades and have children now running family businesses that have remained loyal to the bank into the next generation.

These people need a bank in their town — not one, two, four or six hours drive away.

There’s a lot that could be considered misleading in NAB’s testimony at Sale, but saying it is “committed to being where its customers are” is the first outright fib given in evidence to this Parliamentary Inquiry.

Contempt? It's up to the senators to determine that.

* In reference to the drop in foot traffic experienced at the Maffra branch, the author told Independent Australia she had asked NAB to confirm:

  • when the Maffra branch moved to reduced hours;
  • how many days over 2022 was the branch closed due to staff shortages; and
  • the last day the branch traded.

A media spokesman refused to answer the questions, sending only the Maffra closure fact sheet.

NAB was also asked to supply missing fact sheets for Lavington, Narrandera, Tocumwal, Rosewood, Corrimal, Figtree and Kingscliff branches and the name of the bank's representative on the Regional Banking Taskforce.

To date, no response has been provided.

Dale Webster is an inaugural recipient of a Walkley Foundation Grant for Freelance Journalism on Regional Australia. She publishes independently through her own title, 'The Regional'. You can follow Dale on Twitter @TheRegional_au.

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