CBA cops $25m penalty
‘Unconscionable conduct’ on bank rates
COMMONWEALTH Bank has agreed to pay $25 million to settle legal action brought against the bank by the corporate regulator over bank bill swap rates.
The bank has reached an inprinciple settlement with ASIC under which it will acknowledge attempting “to engage in unconscionable conduct” and that it could not adequately monitor trading and communications of staff.
The Federal Court must approve a settlement that will also mean CBA pays a $5 million penalty, $15 million to a financial consumer protection fund, and $5 million of ASIC’s costs.
The amount is half that paid by rivals National Australia Bank and ANZ in similar settlements related to alleged manipulation of the key rate. Those settlements covered more breaches than those acknowledged by CBA.
“In the course of trading on the BBSW market in Australia on five occasions between Feb- GODFREYS is blaming its TV ads for a big dive in sales that has forced the vacuum cleaner retailer to cut its fullyear earnings guidance for the second time in two weeks.
The retailer has warned it is likely to breach loan covenants after like-for-like sales for the past two weeks were 27 per cent lower than the same time last year.
Godfreys yesterday downgraded guidance for earnings before interest, tax, depreciation and amortisation from the lower end of its $5 million-$6 ruary and June 2012, CBA attempted to engage in unconscionable conduct in breach of the ASIC Act,” CBA said in a statement yesterday.
“CBA will also acknowledge it did not have adequate policies and systems in place to monitor the trading and communications of its staff in order to prevent that conduct from occurring.”
CBA has also agreed to enter into an enforceable undertaking with ASIC, under which an independent ndepend expert million range to $3.5 million.
Like-for-like sales for 2018 so far are 7.8 per cent lower than at the same time last year, the company said.
Godfreys, whose board yesterday recommended a takeover bid by 99-year-old co-founder John Johnston, blamed the latest fall in sales on changes to its ad campaigns that focused on product benefits rather than discounts and sales.
The latest ads were a far cry from those from the 1990s, when then boss John Hardy famously will review its BBSW business.
The enforceable undertaking would be the second in two weeks to which CBA has agreed following the APRA report that slammed the bank as complacent and blinded to threats in its business.
Ratings agency Fitch this week downgraded CommBank’s outlook for its longterm debt default risk from stable to negative.
CBA shares yesterday fell $2.09 , or 2.84 per cent, to close at $71.41. demonstrated the strength of a vacuum cleaner by sucking up a 16-pound (7.3kg) bowling ball.
“These changes have not resonated with Godfreys’ existing customer base and as such the company has reverted to the previous television advertising approach for this segment of the market,” Godfreys said.
“Godfreys will continue to test refinements to the product feature and benefits approach through digital channels to target a broader customer base that the company is currently not attracting.”
Despite concerns about breaching loan covenants due to the earnings decline, the company said its lender would waive its rights should the breach occur as long as the two parties begin negotiations this week about reducing the debt.
Godfreys listed in 2014 at $2.75 and closed yesterday at 30c.
Mr Johnston, who already owns 28 per cent of Godfreys stock, has offered all other investors 32 cents per share.