Wall Street reverberations shake Down Under
Commonwealth Bank chief admits failures, greed
ALMOST $50 billion has been wiped from the value of the nation’s biggest companies as a vicious sell-off on Wall Street hits our shores.
The key ASX 200 index fell by 2.7 per cent yesterday in its second worst one-day result for the year.
The index, which broadly tracks the nation’s 200 biggest listed companies, has lost about $90 billion this week and yesterday fell back through the 6000-point barrier for the first time since June.
Key blue chip stocks were hard hit with BHP Billiton down 3.8 per cent to $33.40, Rio Tinto off 3.3 per cent to $76.61, Coles and Bunnings owner Wesfarmers shedding 3.1 per cent to $47.45 and Woolworths 1.1 per cent lower at $27.82.
The Big Four banks had more than $10 billion wiped from their collective value with Commonwealth Bank shedding 2.9 per cent to $67, Westpac dropping 2.6 per cent to $26.29, National Australia Bank giving up 2.6 per cent to $26 and ANZ finishing 3.24 per cent lower at $26.01.
Tech stocks were hardest hit – mirroring the performance of their US rivals – with online payment provider AfterPay, logistics software company WiseTech Global and language and search data service provider Appen all having double-digit share price falls.
Gold stocks were the best performers as investors sought shelter.
The rout followed Wall Street suffering its biggest oneday plunge in eight months as investors felt jittery about the pace of interest rate hikes in the world’s biggest economy and fret about trade tensions with China.
Higher interest rates increase the cost of borrowing for companies and households while the era of cheap money unleashed since the global financial crisis a decade ago has pushed US share prices to record highs.
COMMONWEALTH Bank chief executive Matt Comyn has spoken face-to-face with customers affected by the kind of misconduct revealed at the banking royal commission.
Mr Comyn (pictured), who took up the top job six months ago, has revealed the fact while being grilled by federal politicians at a parliamentary hearing in Canberra. It came after he acknowledged the hurt the bank’s actions have caused.
“I certainly acknowledge the hurt and the very, very difficult circumstances that some of our customers have found themselves in, and some of that as a result of our actions,” he said yesterday.
The chief executive said there was no substitute for hearing those people’s stories directly, and he had spoken with a number of them over the phone and fewer than 10 of them in person.
“To get a proper understanding of the individual cases, some of them are very, very complex and they do take quite a bit of time,” he said. So far this year, 41 Commonwealth Bank employees have been terminated due to misconduct, while another nine have resigned while being investigated, Mr Comyn said.
He could not confirm how many of the sackings were directly linked to revelations at the royal commission.
Mr Comyn earlier admitted the Commonwealth Bank was too slow to fix customer service problems uncovered by the royal commission because it had become complacent.
“There have unfortunately been failures of judgment, failures of process, failures of leadership, and in some instances, greed,” he said. “We’ve been too slow to identify problems, too slow to fix underlying issues, and too slow to put things right for customers.
“We became complacent.” Mr Comyn laid out the steps the bank has taken, including strengthening its lending processes and making it simpler for customers to choose products. But he said they had plenty of work to do to regain trust.
The hearing is being held by the House of Representatives committee on economics as part of a review into the big four banks.
It comes less than two weeks after royal commissioner Kenneth Hayne QC delivered an interim report, blaming greed and the pursuit of profit for the widespread misconduct in the banking and financial services industries.
Westpac CEO Brian Hartzer also fronted the hearing yesterday, ANZ chief executive Shayne Elliott will appear today and National Australia Bank boss Andrew Thorburn will appear next week.