Bank of America Merrill Lynch exec to join NAB

The market responded positively to National Australia Bank’s (ASX: NAB) plan to bring Bank of America Merrill Lynch chief executive and country head Craig Drummond down under, to take charge of the finance and strategy role of the company.

Mr Drummond told The Australian “I feel very good about being able to leave Bank of America Merrill Lynch at a time when it’s in very good shape”. Although he won’t be receiving a position on the board, many believe he could be the successor of current CEO Cameron Clyne.

Mr Drummond must also forfeit over $6.5 million in deferred employment incentives from his current employer. However, NAB has said it will compensate him in cash and equity.

Other possible new bosses include Gavin Slater, head of personal banking, Lisa Gray, head of operations, and Joseph Healy, who is in charge of the nation’s biggest business bank. Although Mr Clyne would rather an internal appointment of the new CEO, the strategy to appoint a new chief rests solely with him.

Bringing in an external leader could also be good for the bank. It’ll provide the newcomer with an opportunity to transform the bank and rid it of a history of underperformance. Mr Clyne said that Drummond, former chief operating officer of Goldman Sachs JBWere, would be a “strong addition to our leadership team”.

Foolish takeaway

NAB could do with a transformation of its business, and perhaps an experienced outsider can bring something new to Australia’s fourth biggest bank. Compared to the Commonwealth Bank (ASX: CBA) and ANZ (ASX: NAB) NAB is not as appealing to investors, particularly when you take into account its accident-prone history. With little growth on the cards, NAB is fully priced or perhaps even a little overpriced although its 9.0% (once franked) dividend is very appealing to income investors.

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Motley Fool contributor Owen Raszkiewicz owns shares in ANZ.

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