Narev welcomes CBA probe to halt eroding public trust

COMMONWEALTH Bank chief Ian Narev has greeted an unprecedented probe into its conduct as a “positive and constructive step” in strengthening public trust in the nation’s biggest lender.

Shares in the CBA dipped 1.3 per cent yesterday after the Australian Prudential Regulation Authority announced it would launch a public inquiry into the bank’s governance, culture and accountability.

It is the first time the banking regulator has committed to making the results of an inquiry public before the matter is concluded.

The investigation comes after the nation’s dirty money agency launched Federal Court action earlier this month against the CBA for “serious and systemic” breaches of the nation’s anti-money laundering and counter-terrorism financing rules.

Those allegations add to concerns around the culture at the bank, which has been rocked by scandals in its financial planning and life insurance arms in recent years.

Mr Narev, who will leave the CBA next year, said the APRA probe would highlight actions the bank was taking to improve its conduct.

“We see this as a very positive and constructive step,” he said. “It will be a very good opportunity for us to let independent eyes look at the many things we are doing internally to strengthen trust and give the community a view on those.

The inquiry’s terms of reference and panel composition are yet to be finalised. It is expected to last six months and will be paid for by the CBA.

APRA chairman Wayne Byres said community trust in the banking system had been damaged in recent years.

“The CBA in particular has been negatively impacted,” he said. “Given its position in the Australian financial system, it is critical that community trust is strengthened.”

Shares in CBA closed down $1.04 yesterday at $76.68.