AUS­TRALIA’S COMMBANK SCRAPS CEO’S BONUS

CommBank CEO loses A$2.9m but re­tains board’s con­fi­dence

New Straits Times - - Business -

COM­MON­WEALTH Bank of Aus­tralia (CommBank) yes­ter­day scrapped its chief ex­ec­u­tive’s bonus for dam­ag­ing the bank’s rep­u­ta­tion amid al­le­ga­tions it broke money-laun­der­ing and counter-ter­ror­ism fi­nanc­ing laws, but said he re­tained the board’s con­fi­dence.

Aus­tralia’s fi­nan­cial in­tel­li­gence agency last week ac­cused the bank of roughly 53,700 breaches, launch­ing a civil court ac­tion that could see the coun­try’s big­gest lender fined sev­eral bil­lion dol­lars.

The case is the largest of its kind in Aus­tralian cor­po­rate his­tory, and sent CommBank shares slid­ing for their big­gest one-day de­cline in 18 months on Fri­day.

The bank’s board said yes­ter­day it had cut short-term bonuses to zero for chief ex­ec­u­tive Ian Narev and other top ex­ec­u­tives for the year to June 30.

“In reach­ing this con­clu­sion, the over­rid­ing con­sid­er­a­tion of the board was the col­lec­tive ac­count­abil­ity of se­nior man­age­ment for the over­all rep­u­ta­tion of the group,” said chair­man Catherine Liv­ing­stone.

The ac­cu­sa­tions have re­vived calls for a pow­er­ful ju­di­cial in­quiry into Aus­tralia’s bank­ing sys­tem fol­low­ing a se­ries of scan­dals, in­clud­ing in­sur­ance fraud and in­ter­est rate rig­ging in re­cent years.

Trea­surer Scott Mor­ri­son, who has pre­vi­ously re­jected pres­sure for such an in­quiry, told Par­lia­ment yes­ter­day the gov­ern­ment was pre­pared “to con­sider all op­tions”.

An in­quiry known as a Royal Com­mis­sion could have the abil­ity to in­ter­ro­gate bank ex­ec­u­tives and de­mand full dis­clo­sure of in­ter­nal doc­u­ments. The pro­posal has wide­spread public sup­port and the back­ing of the op­po­si­tion La­bor Party.

The move, de­signed to smooth public con­cerns, came a day be­fore the bank re­leases its an­nual results to­day, with an­a­lysts tip­ping record cash earn­ings of A$9.8 bil­lion (RM33.3 bil­lion).

CommBank paid Narev A$2.9 mil­lion in short-term bonuses as part of a to­tal pack­age of A$8.8 mil­lion last year.

In order to pre­vent a board spill be­ing trig­gered at the an­nual gen­eral meet­ing in Novem­ber, the bank needs to en­sure its re­mu­ner­a­tion re­port is ap­proved by more than 75 per cent of vot­ing share­hold­ers, fol­low­ing a “first strike” against it last year.

Un­der Aus­tralian law, a board spill can be trig­gered if two con­sec­u­tive re­mu­ner­a­tion re­ports are voted down.

Mean­while, a hus­band and wife filed a suit against the bank yes­ter­day, ac­cus­ing it of fail­ing to dis­close in­vest­ment risks associated with cli­mate change, adding to pub­lic­ity head­winds for the bank.

The le­gal firm run­ning the en­vi­ron­men­tal case, En­vi­ron­men­tal Jus­tice Aus­tralia, said it was a world first with po­ten­tially far­reach­ing ram­i­fi­ca­tions for cor­po­rate Aus­tralia.

Com­plainants Guy and Kim Abra­hams, who bought the bank’s shares in the 1990s, de­cided to sue when it did not agree to name cli­mate change as an in­vest­ment risk in its an­nual re­ports. Reuters

BLOOMBERG PIC

Aus­tralia’s fi­nan­cial in­tel­li­gence agency has ac­cused Com­mon­wealth Bank of Aus­tralia, un­der chief ex­ec­u­tive Ian Narev, of roughly 53,700 breaches.

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