Is the National Australia Bank Ltd (ASX: NAB) share price a buy after just announcing a new CEO?
Investors certainly seemed to like the announcement with the share price rising around 2%. The bank has chosen Ross McEwan as the CEO and Managing Director.
NAB lost both its CEO and its Chairman because of their poor responses in the Financial Services Royal Commission and their reaction to the issues.
With that in mind, I think it was necessary for NAB to choose someone from outside of the bank, or indeed someone from outside the current Australian banking industry. However, he was previously a banking executive at Commonwealth Bank of Australia (ASX: CBA).
Mr McEwan was the chief executive officer of the Royal Bank of Scotland since 2013 and he led the bank through significant change and recovery. NAB is going to be giving Mr McEwan the same sort of task to bring NAB out of the wreckage of the royal commission.
Now that a CEO has been chosen, chairman-elect Philip Chronican will transition to the chairman position in mid-November 2019, replacing Dr Ken Henry.
In the ASX release, Mr McEwan referenced the areas that NAB can extend its lead such as business banking, agriculture and health. He also aims to improve the bank's standing in customer service.
The big ASX banks have a lot of work to do to win back the trust of the Australian population, but this could go some way to doing that.
Foolish takeaway
NAB is trading at 12x FY20's estimated earnings with a grossed-up dividend yield of 8.6%. NAB appears to be quite cheap, as it always has been, and this new CEO could do good things for the bank. But only time will tell whether today's price was cheap or a value trap.
