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Don Sanders: the most distinguished banker in Australia’s history

When I recently reread the obituary of Don Sanders, who died in November 2020, I reflected on an amazing but largely unheralded career. Don lived to a good age of 93 after retiring at 65 and was as humble in retirement as in work. He didn’t gradually fade away; he left the financial markets stage entirely for his final 28 years.

I asked myself where Don ranks in the banking pantheon. Then it struck me that there really is no such memory place for bankers. Bankers as CEOs in Australia’s banking oligopoly are normally given a licence to print money, a de facto guaranteed franchise. Their job is to collect their economic rents, not to impatiently rev the place up.

For regulators, yes, there has been the occasional deserved pantheon placeholder. Central bankers are sometimes called to put out the raging fire of inflation, and Paul Volker was my hero as Chairman of the US Federal Reserve from 1979 to 1987. He possessed the ability to be incredibly tough while avoiding the hubris.

Sanders was of this ilk. Humble, learned and vastly experienced, he straddled both central banking and commercial banking, and I nominate him as the most distinguished banker in Australia’s history.

His career path

Sanders first joined the Commonwealth Bank in 1943 as a teller in Wollongong, at a time when the Bank also functioned as Australia’s central bank. After completing an economics degree, he moved to Canberra for a stint in Treasury, then spent a year at the Bank of England and on to the Reserve Bank of Australia in 1960 under its first Governor, Nugget Coombs. He stayed at the Reserve Bank for the next 27 years where for the last 12 years, he was Deputy Chairman and Deputy Governor.

Sanders was therefore perfectly qualified to become the Reserve Bank Governor, and his chance came in 1982. John Howard was then Treasurer and John Hewson his principal adviser but there may have been some appeal to Howard in having a Governor of lesser status and grounding than Sanders. Further, I suspect there were professional and personal differences in style between Hewson and Sanders and so, to the profound shock and dismay of many at the Reserve Bank, the role went to Bob Johnston.

This decision must have been a terrible disappointment to Sanders, but he soldiered on, although at the age of 55, his opportunity for Governorship had gone. He stayed at the Reserve Bank for another five years.

CBA comes calling

In 1987, aged 60, he was offered the role of Managing Director and CEO of the Commonwealth Bank. He was instantly tempted but he knew the appointment would be received with mixed feelings in some quarters. Early in the deregulated era, the Commonwealth Bank was a bloated and protected species, and more out of touch with the real world than its private sector bank competitors.

Bernie Fraser was Secretary of the Treasury beginning in 1984, and he told me:

“I always had a soft spot for Don. He was tough but he didn’t outwardly display that toughness. In fact, he covered it with a facade’.

Fraser was also a director of the Commonwealth Bank and was aware of the magnitude of the task for the new CEO. He said that prior to the appointment of Sanders, he saw presentations by management at board meetings that were “unbelievably bad” to the point of being “bloody hopeless”.

Two of my favourite paragraphs on banking deregulation, written by Al Wojnilower, formerly of First Boston, say:

“The system pre-deregulation is correctly described as a well-kept and orderly zoo. Different species such as banks, brokers and insurance companies were neatly housed and fed in separate cages divided for function and geographic scope. The bars between the cages prevented the various species from preying on one another. Within each cage to be sure there was, as in a real zoo, competition as respect the pecking order, the best food, and so forth, but the vigilant keepers made sure this never led to serious injury or death. Relations between the animals and the visitors, between the financial institutions and their clientele, were sober and sedate.

Deregulation of the 70s and 80s destroyed this idyllic arrangement … this was unfortunate for the prosperous inhabitants of the gilded cages who naturally tended to attribute their own wellbeing to their own efforts, and believe they could do even better, if set free to forage on others turf … Most of the caged animals had enjoyed a sheltered existence like that of farm animals or even house pets. Now they were freed to become both predator and prey in an unfamiliar jungle that offered reduced nourishment …”

How CBA transformed under Sanders

When Sanders took the reins at the Bank he had joined in 1943, after 44 years in the wings, he knew he had only six years till statutory retirement and much to do. Fraser saw first-hand Sander’s wonderful bedside manner, sitting down and chatting with private sector CEOs and how ‘the organisation really blossomed under his lead’.

Sanders was ably assisted by young tyros like David Murray and Ian Payne and an older head like Bruce Asprey, who knew where the bodies were buried. David Murray remembers a bank trying to catch up to its trudging fellow cage dwellers, out in the jungle now.

The Commonwealth Bank’s biggest handicap was the longstanding issue of the Board and the Government not seeing eye-to-eye, like Bureaucracy A versus Bureaucracy B, and the enemies within included unions, position holders and seniority rules.

According to Murray, ‘Don quickly found a way.’ The two big issues were dividend policy and capital shortage. After all, if the Bank was the only Australian bank with a government guarantee, why did it need capital? Sanders put himself in the shoes of the politicians and argued back to his armour-wearing board colleagues and bridged the divide.

Things started to get sorted. At management level internally, fiefdoms were common, especially in Staff Department. It existed more for the industrial relations to satisfy unions and the Canberra bureaucracy than managing human resources.

His management style

To sum up Murrays’ views on Sanders, he said:

“He was a one-off special, he had such a soft nature, but on matters of intellectual or administrative importance he was very, very, tough. It’s a rare combination and it comes with the best people I have learnt from.”

Other glimpses come from Tony Aveling, a BT colleague who worked on corporate matters with Sanders, including the acquisition of State Bank of Victoria (SBV). It was a particularly difficult transaction, signed after months of negotiations with a reluctant Victorian Government. The Victorian opposition, perceiving political opportunity, threatened to block completion of the deal. Aveling and Sanders met the opportunists, and after hearing their concerns, Sanders underwent a metamorphosis into a gentle professor, eyes half-closed, seemingly musing to himself, in an academic matter, along these lines:

“Well, SBVs customers have been told they will shortly become depositors in the Commonwealth Bank, at which time they will become my responsibility. But if you fellows block this you could see a run on the bank. I suppose Bernie Fraser would have to step up … No, no, I am forgetting … state banks are not regulated by the Reserve Bank, are they? So it’s not Bernie’s problem. I guess it would become your problem.”

Message received.

Garry Mackrell, a strategist and member of the Commonwealth Bank Executive Committee for many years, worked almost his entire career in the Bank. He tells a story where a pushy investment banker was seeking a last-minute spot on the underwriting panel for the prized Commonwealth Bank float. He lobbied the politicians successfully, to Sanders’ annoyance, and so stood to present his case. Sanders swivelled his chair, took out his pocketknife and nail file, and proceeded to manicure his nails, filing away for 20 minutes with no eye contact. Then he called time and out the door trudged the banker with not a sausage.

Sanders was as old-fashioned as anybody born in 1927, and operating in the 1990s, would be. David Murray tells how one day, Sanders confided that he would retire on a seemingly undistinguished date. The date fitted no plan, no calendar, nothing, just a random date. Murray asked its significance and Don replied, “It’s my 65th birthday.”

From a distance, I observed how Sanders avoided the nonsense and hubris, especially sorting out bank credit problems of the late 1980s. Former Reserve Bank Governor, Ian Macfarlane, was also a fan of Sanders, and he commented to me that,

“Two state banks failed, and two of the Commonwealth Banks’ three big competitors made losses and had to be recapitalised.”

But Sanders focused closer to home, on making the Commonwealth Bank worldly and ready to compete. He avoided the excess while picking up one of his fallen competitors, SBV. Over a 52-year career, Sanders only really worked in one place, finishing his amazing career as CEO of the Commonwealth Bank. Once passed over for the Reserve Bank Governor role on a political whim, Paul Keating eventually righted a wrong. Speaking at the funeral of Sanders, Keating said,

“Don was fundamentally a great public servant, he was very important figure, he was central … in the transformation of Australia from a closed economy to an open economy.”

So true.

 

Rob Ferguson was Chief Executive Officer of BT Australia from 1985 to 1999, and after chairing several large, listed entities, he co-owned Magic Millions and is now retired.

 

6 Comments
Jennifer Sanders
November 27, 2022

Dear Rob, Thank you very much for your article on my father Don. He would have been quietly pleased, as his family and friends are, to read your thoughtful assessment of his career in banking - a significant part of Dad's fulfilling and well lived life.

Jonathan Sanders
November 26, 2022

Thank you very much for this article, and the comments, Rob. It is so rewarding to read the professional assessments of our Dad's work. When he started in Wollongong at sixteen, he was issued a hand-gun every Friday afternoon before he and a colleague caught the train to Sydney Head Office with the week's banking papers and cash. It was wartime, and he worked as a plane spotter when not working or studying. He did his Economics degree at night, and then taught accounting at Tech. He was proud of the fact that he could still manually count paper and coins like the most adept teller. Of course, he was very busy when we were growing up, but always ensured he had time for us, even when he was consistently working late. He later worried whether he had given us enough family time, but it was typical of him to look for things he could have done better, and we assured him he had hit a good balance. When he didn't get the Governorship, he said that he had probably jumped over Bob Johnson for the Deputy position, so it was fair enough for Bob to have a turn now, and I know they made a great team over the next years. When he was retiring, Mum, who had come off a farm to marry him, said "My turn" and they went into farming where he spent 20 years working for her as a (self-described) farmhand in a successful fine wool enterprise, as well as being a devoted and exciting Pa to his grandchildren. He also did a few years as a Board Member on various companies until he was (legally) too old. On the day he retired from the Commonwealth, he commented "According to the law, my brain falls out tomorrow" and he was very conscious that he would have had much more to give beyond his 65th birthday. My understanding is that he was one of the last of the career public servant bankers - no huge bonuses or large salaries were looked for - when his Deputy Governor salary of $60k/annum was reported prominently in the Herald in the mid-1970's, he was concerned that people might think he and his colleagues were doing it for the money, rather than the strong sense of social duty that was always their prime motivation. From things he mentioned at the time and later, I believe it was this strong sense of running the economy for the benefit of all Australians (as per the Reserve Bank Charter) that inhibited his promotion to Governor under Howard. He was always conscious of fairness and honesty, and he was not afraid to speak up, respectfully but honestly, about the consequences of proposed decisions by Government, and I know some politicians resented this. When we children inherited shares in a financial company, he made sure we divested them immediately so that there could be no possibility of advantage to us from his regulatory activities. In his retirement, he was very conscious and scornful of the greed that could sometimes be seen in some of the management decisions being made in corporate arenas, and he told me that he was proud that he had prevented the Commonwealth becoming exposed to the Bond and Skase collapses (they didn't convince him as lending prospects). In his last days, he asked whether I thought that his work had actually made a positive difference to the world, and he was very pleased and relieved when I gave him an emphatic "Yes". He was, in hindsight, a giant of a man, but if he was here today, he would minimise his own role and instead refer you to Nugget Coombs, Aussie Holmes, Bob Johnston, Harry Knight and all the many other talented colleagues that were part of his work environment. Once again, thanks for the kind words remembering a wonderful human being.

Sean
November 10, 2022

A much-deserved reflection on an impressive man. As an advisor on the CBA IPO I reported to Mr Sanders, for it was natural so to refer to him, very early every morning during critical periods. His poise and incisiveness were always impressive. He tore a strip off me in a Steering Committee meeting for a mistake he knew I was not responsible for but he was unwilling to criticise one of his own team in public. The message got through. I couldn’t take umbrage, only admire his dexterity and loyalty to his own people.

Derrick Docherty
November 09, 2022

An excellent summary of a real gentleman who was effective and unfailingly polite. Well done Rob

Michael Hill
November 09, 2022

Thanks Rob. Lovely summation of a great banker, and also very nice to see plenty of credit given where plenty of credit is due to Mackrell, Payne and DVM.

Nick Chaplin
November 09, 2022

I was fortunate to meet Don Sanders when working my first year at Commonwealth Bank in 1989. He was visiting the branch I worked at in Wollongong (much like himself!). He was always smiling - a charming man and a popular Managing Director. He always made time for his staff - much unlike MD’s these days. I didn’t see the original obituary so this was news to me. My condolences to his family. Don Sanders was a good man, a great Managing Director and a prominent reason why CBA is on such a solid standing today.

 

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