NAB and Other Catastrophies

By Peter Lewis

It was a week where NAB slashed jobs and executive bonuses went south. Justice? Not on your nellie.

NAB Vision Clouded

In the eyes of National Australia Bank chief executive Frank Cicutto it was a "good news story" - to the rest of us it was another bank being a bank. NAB announced it was cutting 3,400 jobs and closing 56 rural branches as part of a major restructure masterminded by the US consulting firm McKinsey. The strategy was to move the bank away from serving customers and instead move to selling them services - through the aptly named 'Wealth management' division. While the Finance Sector Union understandably denounced the cuts, taking NAB to the Industrial Commission in a bid to get it to disclose the full details of the plan, it was the market's reaction that was really instructive. Bucking the adage that investors like job cuts, the share price actually fell for the two days after the cuts were announced. Could it be that the markets, like the FSU, do not accept Frank's protestations that the cuts have nothing to do with the $3.5 billion NAB lost on its failed US investment last year? And the publicity only got worse when NAB rejected an ANZ bid to buy the branches slated for closure. Maybe we should be thanking Frank after all; he is proving that a bank that does not want to deal with customers is not really a bank, just another snake-oil sales business trying to empty our wallets.

Rough Justice for CEOs?

News from the US that the downturn after Sept 11 has eaten into those whopping bonuses paid to the Big Cheeses of Corporate America. Bloomberg reports that the chief executives of Pearson plc, Motorola Inc and Royal Philips Electronics NV are among the latest CEOs to forgo bonuses and take salary cuts as their companies lose money. Pearson chief executive Marjorie Scardino, for example, declined a £157,500 ($A425,000) bonus for 2001 after the owner of the Financial Times posted a full-year loss of £391 million, down from a profit of £179 million a year earlier. Philips reported its first annual loss since 1996, while Motorola had its first annual decline before restructuring costs in 71 years.

Exodus of Wall St Elite

The pain spread to Wall Street where 43,300 jobs were slashed in the year to February, marking the biggest cuts in more than 25 years. And the firing spree may not be over. The job cuts are the biggest in the industry since 1974, according to the Department of Labour, when a two-year bear market ended. The latest round includes more managing directors, who make an average of $2.45 million annually.

Enron Execs Keep It Close To Home

But trust the Enron boys to take out a little extra insurance with revelations that executives could hive away massive amounts of money into luxury homes to avoid recovery litigation. The New York Times reports that lawmakers and bankruptcy law specialists are citing the collapse of Enron in urging the American Congress to close a loophole in state law in Texas and Florida that would allow the company's former executives to shield millions of dollars in assets from shareholders and employees by shifting it into luxury homes. Without a change, Enron executives will "continue to live in multi-million dollar mansions, even as their former employees struggle to find a new pay cheque or to cover their rent." Former Enron executives said through lawyers and spokesmen that they had no plans to invoke the homestead exemption to block creditors or the government from seizing any of their assets. But at least two of them - Kenneth Lay, the company's former chairman, and Thomas White, who left Enron last year and is now the secretary of the Army - have sold luxury homes elsewhere in the country in the wake of Enron's collapse and continue to hold on to huge properties in Texas and Florida.

<>b>Andreson's Cop Enron Fall Out

The embattled accountants implicated in the Enron collapse, Arthur Andersen, is preparing to shed as many as 7,000 jobs through layoffs and thousands more through a deal with rival Deloitte Touche. Andersen could trim up to 25 per cent of its workforce of 28,000 employees in the United States and Canada. The layoffs will probably affect lower-level staff members first, rather than the firm's 1,750 partners, the newspaper quoted another person on the call as saying.

The Marks Take Off

Two Anderson workers who won't be hanging around for the job losses are the Marks - Mentha and Korda - who have left the global consultants to set up there own practise. As the force behind the long, but ultimately futile battle to safe Ansett, they should have no problem with brand recognition.

Traveland Employees Win Entitlements

Some good news out of Ansett, with Traveland employees receiving their employee entitlements, after the company's liquidator Hall Chadwick obtained access to the outstanding funds. Hall Chadwick has been in talks with the federal government regarding Traveland employee entitlements shortly after Traveland went into administration last December.

More Telco Jobs Go

There are further signs the telecommunications industry is under pressure, with a key service provider forced to slash 20 per cent of its workforce. Open Telecommunications, which provides infrastructure to Telstra and Optus, will lose about 80 employees, mainly from its Australian and New Zealand operations. Open says the job cuts are part of a new corporate strategy to close non profitable sections of the business. The announcement came one day after the launch of new player TeleOne - a reincarnation of the failed One.Tel

Berri Juices Jobs

Meanwhile, fruit juice maker Berri Limited has announced a $14.1 million restructure that includes 30 job losses at its base in South Australia's Riverland district. The company said 18 maintenance staff and 12 other salaried staff would lose their jobs as a result of the multi-million dollar upgrade of its McKay Road plant in the town of Berri. The Australian Manufacturing Workers Union is concerned a further 260 casual workers could also lose their jobs.