Given that Macquarie negotiated PBL’s $1.8 billion purchase of Crown 10 years ago and the way the Millionaire Factory has cashed in from this recent crazy period of casino capitalism, Melbourne’s Crown Casino is a fitting venue for the first AGM away from Sin City since the bank listed in 1996.

As usual the bank has pre-released all its AGM material and it is clear that they are not giving an inch on the question of whether the Macquarie Model is broken. That said, the stock is up 6% to $49.40 out of relief that the presentations contained no shocks. Check out the 61 page presentation pack along with the 4 page press release stressing that beating the bank’s record $1.8 billion net profit from last year will be “increasingly challenging”.

The Peter Costello question. The opening question for co-founder and chairman David Clarke today will be very brief and direct: “Good morning chairman, why haven’t we secured Peter Costello’s signature yet?” An honest answer would be that Costello and new Macquarie CEO Nicholas Moore hate each other, but given the huge stable of former politicians that the bank has hired (Bob Carr, Alan Stockdale, Warwick Smith, Ross Cameron, Rob Knowles etc), it will be interesting to hear Clarke’s response.

Is the Macquarie Model dead? After that, there is a plethora of issues to work through with the most important being the future survival of the Macquarie Model of listed infrastructure funds. Babcock & Brown CEO Phil Green declared a wholesale review when asked about this issue at his AGM in May as you can see in this video. The recent Macquarie Airports AGM saw these arguments raised but chairman Max Moore-Wilton was dismissive, yet the discount applying to the likes of Macquarie Airports and Macquarie Infrastructure Group has only risen since.

Other questions. In terms of other issues to raise, we’ll be picking and choosing our way through these:

  • Well done for shifting the bonus system away from cash to more shares and was it last year’s shareholder revolt that triggered this?
  • How much should we blame short sellers for the halving of the share price and how much is it the new reality of the credit crunch?
  • How far under water are our collective investments in all the listed Macquarie funds?
  • Why is PwC still auditing us and most of our funds when Babcock has a policy of different auditors to preserve independence?
  • If we really are so strong, why haven’t we been pouncing on weakened rivals in his extraordinary environment or at least buying back our shares to take on the short sellers?
  • That was a brilliant effort to produce a record $992 million in net trading income in the latest half. How did you do it in such volatile times and why did treasury and trading boss Andrew Downe see his overall pay tumble from $21.5m to $14.9m?
  • The Centro collapse has tarred the model of companies lending executives money to buy shares so will chairman David Clarke be refinancing his $35 million Macquarie loan and what about Nicholas Moore’s $12.25 million loan?
  • Why has Macquarie pulled out of the inquest over the death of Beaconsfield gold miner Larry Knight in the rock fall on Anzac Day 2006?
  • Why does our new CEO privately own the trade magazine Australian Banking & Finance (see details in July 7 edition) and should we expect Macquarie to be named “Investment bank of the year” every year?

Peter Fray

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