Directors’ heads roll at Australia’s CBA amid allegations over money-laundering

Commonwealth Bank of Australia (CBA), the country’s biggest lender, announced a major board shake-up on Monday to shore up investor support following allegations it oversaw thousands of breaches of anti-money laundering rules.

But the ouster of one-third of the bank’s non-executive board, including the first two directors to leave since the allegations were made public on August 3, failed to impress shareholders.

CBA shares touched 10-month intraday lows before closing down 1.42 percent at A$74.41 ($59.16), while the broader market was down 0.39 percent. The shares have dropped 12 percent since the scandal erupted last month wiping roughly A$17 billion off the bank’s market capitalization.

The board overhaul came as CBA faced the first day of court hearings into the allegations, and while it did not deny that illicit transfers had taken place, it said it would contest its level of responsibility.

CBA has been under mounting pressure to respond more aggressively to the crisis, which has damaged its reputation and exposed it to billions of dollars in potential fines.

Directors and audit committee members Launa Inman and Harrison Young will step down on November 16, while a third director, Andrew Mohl, will leave in a year, CBA said in a statement, without giving a reason for the departures.

CBA announced on August 14 that CEO Ian Narev will leave by mid-2018, although it said his departure was not related to the scandal. Narev has blamed a coding error for most of the alleged breaches.

Robert Whitfield, a former head of institutional banking at CBA rival Westpac Banking Corp, will be appointed to the board, CBA said on Monday, without identifying any other appointees.

Whitfield could be in the running to replace Narev, said Omkar Joshi of Regal Funds Management, a CBA shareholder. “It is unlikely now that you can really have an internal candidate for that role. Rightly or wrongly internal candidates have been tainted with that same brush,” he said.