The end of an era

30 September 2024

Ka tō he rā, ka rere he rā

After 15 years, on 30 September 2024, Jeff Greenslade retired from his role as CEO of Heartland.

In this interview, Jeff reflects on his time at Heartland, including how the company came to be a trans-Tasman specialist banking group, and the moments he’s most proud of.

Q: Can you tell me about Heartland’s formation and your role in it?

I felt I had done my time in large banks and was looking for a challenge. In 2009, the opportunity came along to join Pyne Gould Corporation (PGC) which was the parent company of MARAC Finance (Marac). The purpose of my role was to revisit PGC’s objectives and guide Marac into becoming a bank.

This coincided with the global financial crisis crash and it turned out Marac had a major balance sheet issue with its property exposures. However, it had a strong business in vehicle finance which provided the earnings to support a recapitalisation.

Then, in 2010, we came together with Canterbury Building Society (CBS) and Southern Cross Building Society (SCBS) with the idea that together we had greater prospects of becoming a bank.

That’s when Geoff Ricketts got involved, joining Bruce Irvine and Greg Tomlinson. Geoff joined through SCBS, Bruce through PGC and Greg came in from Marac’s recapitalisation. They are the three key people who have been the Chairs of the various companies along the way and I feel very lucky to have had them as mentors and be able to utilise their various different skills.

In 2011, the merger to create Heartland Building Society happened and we listed on the NZX. Soon after, we bought PGG Wrightson Finance. In 2012, we obtained our banking registration from the RBNZ. That was the end of the first major chapter for Heartland.

Then we started again. What do we do with this new bank?

The thing that stood out for me was the need to create a different bank. We couldn’t just be a smaller version of a big bank. We lacked scale. We lacked distribution. At the time, we had a lot of debates at Board level on opening more branches, transactional banking or launching a residential mortgage offering. But eventually commonsense and logic prevailed. We couldn’t do those things because we wouldn’t be able to meet an acceptable return.

And that’s where the best or only strategy came from. Everything we did had to have a point of differentiation which delivered a higher margin. That allowed us to grow and formed the second phase. We had become a bank, now we needed to reinvent the bank.

In line with the best or only strategy, in 2014 we bought the Reverse Mortgage businesses. It was the New Zealand reverse mortgage book that we wanted, but that came with the Australian book. After buying both, the Australian book started to flourish and grow much faster. That led to the third stage – how to fuel exceptional growth potential in Australia.

We listed on the ASX, bought the StockCo Australia livestock finance business, and, after acquiring Challenger Bank earlier this year, we brought the Australian businesses together to create Heartland Bank Australia.

Heartland has had significant growth since forming in 2011. We’ve seen growth in Receivables from $1.7 billion as at 30 June 2011 to $7.2 billion as at 30 June 2024.

In the same period, our NPAT has increased from $7.1 million to $74.5 million (or $102.7 million on an underlying basis).

Q: What’s the fourth phase?

The fourth phase for Heartland is about simplification via technology with the ultimate goal of having the lowest CTI ratio of any bank in New Zealand and Australia.

Alongside having different products that other banks don’t do, this phase is really about harnessing technology, simplifying what we do, eliminating friction and eliminating areas of inefficiency. We need to speed up our operations – if you can’t do something quickly, you can’t do it cheaply. If you can’t do something cheaply, you have to question why you are doing it at all. And that may mean jettisoning some products along the way.

Q: Why the name Heartland?

In media coverage at the time, “Heartland” was used to refer to the bank we were creating as one that represented the heartland of New Zealand. It made sense. We had a good regional bias – SCBS was Auckland based, but CBS and Marac had southern roots.

The name also sat well with depositors, with good sentiment around being local and New Zealand owned. The Crown retail deposit guarantee scheme was about to expire at the end of December 2011, so our main focus was on retaining depositors in a post-guarantee world.

And no one else could come up with anything better!

Q: Looking back on your time as CEO, what are you most proud of?

The success of our best or only strategy, and particularly the digitalisation work that we have done, and continue to do, has been exciting and enjoyable.

Latterly, bringing the Australian bank acquisition to a successful conclusion. I saw Geoff Ricketts the day before he passed and that was one thing he asked me to promise – not to leave until we had obtained a banking licence in Australia. Geoff had substantial experience in Australian companies as a director. He knew the market well and could see the potential for Heartland. I’m pleased to have been able to deliver on that promise.

Q: When you reflect on Heartland’s impact on its customers and communities, what stands out?

It’s vital to have a strong sense of social purpose. With Reverse Mortgages, we are making retirement better for older Australians and New Zealanders. Livestock Finance gives farmers in both countries better options to manage their business with more flexibility. Similarly in Motor Finance, we’re giving people options to be able get into safer or better cars.

Our Manawa Ako internship programme stands out as being a great contribution internally, but also externally. Through this programme we’ve learnt a lot about why Māori aren’t represented in the financial industry. The whole concept of whakamā (shame or embarrassment) and therefore making sure people feel welcome in what can be an intimidating environment. And there have been some great stories and people we’ve been able to give some opportunities and experience to along the way.

Q: What’s next for you?

I’m in the very happy situation of being able to say I really don’t know. I mean that in a good way. It’s nice for the first time in my life to say, “I don’t know”, and it doesn’t bother me. I’m not going to rush into anything. I’m going to take my time and have an open mind.

Jeff hands the reins to Andrew Dixson, previously Group Chief Financial Officer, who will be appointed Heartland CEO with effect from 1 October 2024¹.

¹ Subject to RBNZ non-objection.