Even best job in HK is no match for being the chief

The old saying 'it is better to be a big fish in a small pond than a small fish in the sea' could apply to veteran banker Michael Smith. His decision to jump ship from HSBC, Europe's biggest bank, in 2007 to become boss of Australia's third-largest lender, Australia and New Zealand Banking Group, was one of the best he ever made. At HSBC, Hong Kong-based Smith was one of the bank's high fliers. He was chief executive of its Hongkong and Shanghai Banking Corporation unit, the chairman of Hang Seng Bank and global head of commercial banking for the group. But he still needed to report to, seek approval and sometimes argue with people senior to him, including the chairman and chief executive of HSBC Holdings in London. Now living in Melbourne as head of ANZ, he is own man - setting targets, hiring people and drawing up the bank strategy. Smith has just been centre stage presenting the growth story for his bank at an investor forum to kick off its yuan business across Asia. 'I have no regrets,' the 54-year-old banker said in an interview in Sydney, where the forum attracted several hundred fund managers. Smith joined HSBC as a 21-year-old fresh-faced graduate from City University in London in 1977. At the time he wanted a job that would allow him to see other countries. It proved another good choice - he has been posted to Hong Kong, the Solomon Islands, the Middle East, Australia, South America and Malaysia, as well as Britain. And life as an HSBC banker was certainly not boring. In 2000, while based in Argentina, he was surrounded by gunmen who tried to kidnap him on his way to work. He escaped but was shot. He ended up taking a taxi to hospital. Life at HSBC seemed fantastic. In an interview in 2006, Smith said he had rejected many offers to change employers. But a year later, he was gone. The catalyst was a visit by ANZ bank chairman Charles Goode. He made an offer Smith could not refuse. Before Smith joined ANZ, the bank had a very small presence in Asia. Goode wanted Smith to transform it from a high street bank in Australia and New Zealand into a bank for Asia. Smith could decide how to put the right strategy in place, and decide on the right people to do it. After the meeting, Smith had an argument with the London office of HSBC, which encouraged him to take the ANZ offer more seriously. 'It was quite exciting and it was not so difficult for me to make the decision. I just decided to change and I have no regrets,' he said. Smith's track record shows he is good at setting targets and bringing in the right people to carry out the necessary strategy to achieve his goals. When he first became chief executive of Hongkong and Shanghai Bank in 2004, most of the profits were generated in Hong Kong. He set an aggressive target of making the rest of the Asia-Pacific region account for half of earnings, an ambition that was met three years later. When he first joined ANZ, its Asian business only represented 6 per cent, but Smith set a goal of increasing that to 20 per cent in five years. Three years on, the bank has reported 14 per cent of its profits are coming from Asia, prompting Smith to upgrade the target to between 25 and 30 per cent in five years' time. Acquisition is the main tool he likes to use. At HSBC, he bought stakes of Ping An Insurance and Bank of Communications. At ANZ, there has been the spectacular acquisition of Royal Bank of Scotland's retail and commercial banking assets in six Asian countries for US$550 million in 2009. While Smith has no intention of making ANZ an international bank in the mould of HSBC, he does want to cover the breadth of Asia, including China and India. The RBS deal did not cover India so Smith plans to set up an Indian branch in Mumbai to 'plug the missing piece of the puzzle in Asia for ANZ. India will be another important market for ANZ in the region.' In relation to China, he believes the internationalisation of the yuan will be big business in the future. At the recent forum he invited 300 corporate clients to listen to a speech by Hong Kong Monetary Authority chief executive Norman Chan Tak-lam explaining the newly launched offshore yuan business. ANZ plans to promote yuan trade settlement for Australian and New Zealand companies with Chinese trading partners. It also wants to raise yuan bonds for companies. ANZ issued yuan bonds in December and has arranged a yuan bond issue for the Fijian government. You worked at HSBC for decades. Why was it so easy for you to decide to jump ship? I had a great career with HSBC but I think if I did not make a change then I may have worked there until I retired. At the time, there was a new chief executive and chairman and it was a good time to move. I also believed banking regulations would make it more difficult to manage a massive organisation. I felt the regional concept, which is what ANZ is doing now, is the model for the future. It is an exciting idea to turn a small bank into a big one instead of being part of a massive organisation. In Asia, many big banks are domestic banks. Only a few Chinese banks and Singapore banks have gone regional, which has paved the way for opportunities for ANZ. Do you think you have made the right choice? I had a fantastic life in HSBC but I also enjoy working at ANZ. I feel very satisfied and do not regret anything. Regret is a waste of emotion. I always think we should spend our time making a better future rather than looking back. I think I have made the right decision. How do you compare the culture and business model of HSBC and ANZ? Did you have to change your management style? From my experience in HSBC, I learned one management style does not fit all. What works in Hong Kong would not work in Argentina: we have to understand the local culture. After joining ANZ, I put the headquarters of international business in Hong Kong and Singapore to attract international people. I also started to move the culture of the local Australia and New Zealand staff. It was difficult for them to understand what super-regional means. Even the clients, many small and medium-sized enterprises are doing domestic markets only. It is a long journey and it has to be an evolution. Do you plan to expand by conducting more mergers and acquisitions? We will only do acquisitions if that can meet with our strategy. Now, Asia business represents 14 per cent of our profit, despite the financial crisis. When I first set a target of having 20 per cent of our profit from Asia in five years, many people thought it was impossible but now we are on the right track to get it. Hard work and good management is what we should do to achieve our target. Personally, do you think work-life balance is better heading a relatively smaller bank than working in an international player? I never have had a work-life balance! But I don't do as much entertaining as I did in Hong Kong. When I was in Hong Kong, I would have to attend three functions in a night, but now I have some nights when I do not need to attend any function. I don't travel as much as I did and that is great. In HSBC, I had to travel to London every couple of weeks. Now I travel shorter distances as ANZ is more regional. How do you compare life in Australia and Hong Kong? Does your family like Australia? The quality of life in Australia is fantastic. The restaurants are excellent and the country is a beautiful place to live. But I miss the Hong Kong tax system. I have three children. My eldest son is working in London at a bank. My second son is studying creative arts in Los Angeles. My daughter is in her final year of school in Melbourne. She and my wife enjoy Melbourne. We all miss Hong Kong which is a great place to get things done and I had one of the best jobs there. Do you earn more money now? More or less the same. In Australia, the high tax rate means a large part of your salary goes to the government. This makes me miss Hong Kong more. How do people prepare to start a second career like you? Just prepare to make change. When you decide to have a second life, the umbrella you live under is no longer there and you have to create a new one. If it rains, it needs to be waterproof. Once you decide to do it, do it and don't look back.