Greg Ward is about to inherit a bank that treats its own businesses as disposable. As he prepares to take over as CEO of Macquarie Group, the financial giant has already restructured its principal investment unit and offloaded its aircraft leasing arm. Change isn't an exception at Macquarie. It defines how the group operates.
A Business That Keeps Rebuilding Itself
Associate editor Joyce Moullakis described the scale of the churn in her analysis. A former Macquarie executive had reviewed the financial group's income and reached a striking conclusion: at any given time, 40 per cent of its businesses hadn't existed five years earlier.
That's a remarkable figure for a firm of Macquarie's size. Most large financial institutions protect their legacy franchises and defend them for decades. Macquarie takes another path. The figure fluctuates, Moullakis wrote, but it captures the group's ability to enter and exit businesses while continuing to evolve its overall model.
The discipline behind the approach is simple. The company pursues better investment returns wherever it can find them and isn't wedded to particular business units. If a division stops earning its keep, the group moves on. If a better opportunity appears, capital follows.
The Latest Moves
Two recent decisions show the approach at work. Macquarie restructured its principal investment unit, reshaping a part of the group that puts the firm's own capital to work. It also offloaded its aircraft leasing arm, leaving behind a business that once sat comfortably within the group.
Neither move came wrapped in sentiment. Aircraft leasing wasn't sacred, and apparently, neither is anything else on the books. Ward takes the chief executive's seat with that tradition firmly in place, while another period of change is already underway.
Capital Follows Returns
There's a case for saying this is how a financial firm should behave. Capital is scarce. Every dollar tied up in an underperforming business is a dollar that can't chase a stronger return elsewhere. Macquarie's willingness to sell, restructure and start fresh puts that logic into practice, without waiting for a regulator, a government program or a crisis to force its hand.
It also shows what a market-driven institution looks like from the inside. Business lines aren't entitled to survive. They earn their place by delivering returns, and lose it when they don't. Shareholders, ultimately, benefit from a management team that's prepared to make unsentimental calls.
The model brings its own demands, of course. A firm that refreshes four-tenths of its business mix every five years needs leaders who can judge which bets to make and which to abandon. That's the task now passing to Ward.
Why This Matters:
Macquarie's habit of constant reinvention offers a useful counterpoint to institutions that cling to what they've always done. A company that can exit aircraft leasing, restructure its principal investment unit and still find new sources of income shows how private enterprise allocates capital without central direction. For investors, the 40 per cent figure signals both opportunity and risk: adaptability can protect returns, but it puts a premium on the judgment of whoever's in charge. That's why the leadership handover to Greg Ward matters. Markets will be watching whether he keeps the model's discipline intact, and whether the group's willingness to let no business unit become sacred continues to serve shareholders well.