Record profit – and pay cuts up top
IT’S now over to Catherine Livingstone and her fellow Commonwealth Bank directors. They have to make a very big ‘statement’ on what would normally be CEO Ian Narev’s big – as in,
$10 billion – day.
The top executive team must all lose their short-term bonuses for 2016-17. Maybe the board should take a haircut.
Those executives with direct line responsibility for the Austrac disaster – presumably the head of the Australian bank, of retail and of technology, and arguably also Narev, at whose desk the proverbial buck stops (and on which the 53,000 ‘missing’ Austrac notices figuratively land) – must cop a greater penalty.
It is neither appropriate nor necessary for him to depart. In my judgment, neither the current issue nor the compendium of issues that have surfaced – some unfairly – around the CBA, constitute a CEO-sacking offence.
Narev’s tenure is a more complex issue, perhaps best resolved as my colleague John Durie wrote in The Australian on Monday by a ‘long goodbye’ – a year or so.
Further, a very, very, well-intentioned word to the wise: all this – the pay cuts – has to be announced, and in full, tomorrow and not postponed either with “you’ll have to wait for the remuneration report” or the “the detail will be in the rem report.”
It’s not actually me providing the advice, although I am transmitting – and endorsing – it. These are the observations of a former senior banker, who needless to say has been less than impressed with either the specific CBA Austrac mess or CBA’s complacent/arrogant corporate behaviour more broadly in recent years.
As this former banker added, there’s a general feeling, across senior levels of the industry, that if we end up getting a Royal Commission into banking (still, in my view, unnecessary and inappropriate), it would be due to CBA.
You might conclude a former competitor is not the most objective source on CBA. But it’s hard to avoid the observation that CBA has tended to prove its own most devastating critic, by its failure to be both contrite and proactive.
Its initial response to the punishing Austrac statement was completely inadequate – more or less, just we will in time file a defence and abide by our disclosure obligations.
It looked like the message had got through when Narev went public Sunday with the admission of serious mistakes and an endorsement of Austrac’s role and its specific actions.
Monday’s statement was a big step backward, with its attempted claim that 53,000 odd transgressions were really only one.
Each of the 53,000 breaches was a cash deposit in excess of $10,000 that had to be reported to Austrac and was not because of the system failure.
So, if CBA had limited individual deposits, as the other three majors did and do, to a sum of less than $10,000 (by physically limiting the number of $100 notes a deposit could take to 99 or less), there quite simply could not have been a deposit in excess of $10,000.
In one sense the bigger issue is the ‘smaller issues’ separate to this spectacular failure: they are all the specific examples of clearly suspicious or actual money laundering behaviour that CBA was too tardy in acting on or failed entirely.
There is zero evidence of deliberate malpractice by CBA or by individual staff.
All this is reason for chairman and board to lead and lead aggressively.