Gavin Slater's journey to his job as executive director Europe for the NAB is an interesting one.

In 2004 the South African-born FCPA was CFO of the NAB's Australian operations when the bank's foreign exchange trading scandal erupted after four traders lost A$360m on rogue deals. John Stewart, the NAB's recently appointed UK CEO, was swiftly brought in as CEO to clear up the mess.

'I met John briefly and I was then asked to run the remedial action program reporting to John. Through this I got to know him quite well,' explains Slater.

Consequently Slater was asked if he wanted to join UK CEO Lynne Peacock in London as her deputy (he had worked alongside her in Melbourne). He jumped at the chance. 'It was a great time for me, I'd always wanted to work in the UK,' he recalls. 'I'd done the working and travelling thing in my 20s, but this was a chance to work in one of the world's great financial centres.'

And as with the foreign exchange issue, a major clean-up operation was on the horizon for Slater. 'Our UK franchises were struggling. The 2004 results recorded a drop in cash earnings of over 28 per cent. We had a high cost-to-income ratio, staff engagement was at an all-time low, as was customer satisfaction. That was the attraction for me, being part of the turnaround.'

The response was swift. NAB exited Ireland, selling its Irish banks (the National Irish Bank and Northern Bank) and retaining the Clydesdale and Yorkshire banks. One quarter of the UK retail network – 106 branches – was closed.

'They were either not profitable and/or located in the wrong areas,' explains Slater. 'We invested heavily in the 344 branches we retained. We put in new technology, giving the staff the tools they needed to better serve our customers. We merged the Clydesdale and Yorkshire banks into one legal entity and now run two brands, but with one back-office operation.'

The business banking operation was also beefed up. 'We doubled our business banking network (integrated financial solution centres) in just over two years, expanding in the south of England, where we had no presence at all. We now have 36 centres in the south out of a total of 74,' says Slater.

'Fundamentally our strategy has been to ‘go back to the future' and create a differentiated banking experience that's almost like it was 20 years ago when the local branch manager was  respected, very knowledgeable and well connected with the local community.'

Slater, 42, is a banking stalwart. His first job was as a humble batch clerk in the local branch of Standard Bank in his small South African town. The bank sent him to university to do his accounting degree. Apart from four years at PricewaterhouseCoopers after immigrating to Australia, he's always worked in banks, and seems to understand what customers need.

'The challenge was to find the right people – because the decision making has been taken away from bankers over the years,'  Slater says. NAB chose to recruit from all the major banks, selecting 'seasoned bankers who are entrepreneurial and confident enough to run the centre as if it is their own business'.

'We did a lot of recruitment – it took a long, long time,' Slater says. 'We would sometimes look at over a 100 resumes for just one position. So we are pretty comfortable that we've found the right people, but it does require continued reinforcement and support. They have autonomy, but what comes with this is accountability.'

The strategy seems to be working. After broadly flat earnings in 2005 the operation recorded 13 per cent growth in 2006 (post-tax profits were some A$550m). The books have just been closed for 2007. 'What you will see more evidence of is a profitable organisation and one that is growing,' Slater says.

Market share is up in the 15 to 19 per cent range, depending on the geographic and customer segment. The Clydesdale and Yorkshire banks are in the top 10 banks in the UK, and hold just under 4 per cent of the total UK market share. Slater is very keen to see this grow. 'What we've achieved is similar to what St George, as an example, has achieved in Australia by taking on some of the majors,' he says.

Taking on the major banks in UK is a tough call. It's a highly competitive business. Margins are tight because UK banks, unlike Australian ones, do not charge fees to open or operate accounts. Fees generally only kick in when customers incur overdrafts or take out loans.

Yet Slater believes the bank is agile enough to take on the bigger players. 'Our mistake in the past is that we have tried to run the UK operation as if it was a dominant player. It just does not work,' he says. 'We can't behave like a large bank – we need to be entrepreneurial, and a lot more responsive. We can't afford to have silos or all the hierarchies that big organisations have. In fairness, sometimes they need these in order to keep control.

'We want to create this vibrant, dynamic organisation where people can come in and really make a difference, get recognised and be rewarded appropriately. It's quite a compelling proposition because we've had top performers from other banks come and join us.'

Slater relishes London life, emitting only the odd grumble about the time it takes to get around the city. So is the UK a long-term proposition? 'Melbourne's home and we do want to eventually return to Australia,' he says. 'We have two daughters: they are nine and six and are very settled in the UK. They are lucky to have had broad experiences, as we've travelled widely in Europe.

'But they were born in Australia and we would like them to go to high school in Australia.'

Out of hours

Who do you admire in business?
I can't name any single individual.

I've learned lots from different people, having seen how they handled a meeting or a customer, or communicated something to the market. The best person I've worked for is my current boss [Lynne Peacock]. I admire the knowledge she has brought to the business. She's also fiercely competitive, but very grounded and loyal to her team.

What keeps you awake at night?
Not a lot. I'm quite good at switching off. I focus on putting things in perspective. I try and think, ‘How does our current crisis stack up against other things that are going on?' I also try not to worry about things I can't do anything about – although I do get frustrated when there's inaction and I don't think people are caring enough and showing ownership.

What are you reading at the moment?
I've just finished Kokoda by Peter FitzSimmons. It gives a real sense of perspective in terms of what conditions the diggers had to endure. When you think about it, day-to-day business crises don't stack up to what they went through.

Reference: December 2007, volume 77:11, p. 19 - 20