Commonwealth Bank shares rose yesterday in a positive reaction to the news that it had promoted head of retail banking Matt Comyn to replace Ian Narev as the company’s chief executive.
Mr Comyn will take charge of Australia’s biggest bank on April 9 and said yesterday he aims to rebuild trust in CBA, which has been beset by a series of scandals – the most recent of which forced Mr Narev to announce his retirement in August.
The CBA is due to release its first half figures next week and analysts are expecting another solid performance.
CBA shares rose 0.7% to $79.19. Goldman Sachs analysts note that Mr Comyn has extensive experience in retail banking and his nearly 20 years’ experience at the CBA will help the group navigate the AUSTRAC proceedings.
Westpac climbed 0.6% to $31.11 and NAB rose 0.7% to $29.26. ANZ shares fell 0.07% to $28.63.
Mr Comyn, who is 42, will receive fixed remuneration of $2.2 million and be eligible for another $2.2 million in short-term incentives plus a maximum $3.96 million in long-term incentives. That will be well short of the $9 million plus Mr Narev was paid at the height of his career atop of the bank.
2017 was another a tough year for CBA, the country’s biggest bank by assets. It revealed Mr Narev’s departure in August in the wake of wide-ranging money laundering allegations that plunged the bank into crisis.
December saw the bank admit to multiple breaches of money laundering and counter terrorism laws in response to a court action filed by AUSTRAC, Australia’s financial tracking agency, although it said it would rejected some of the claims.
The CBA’s problems, plus those at other banks (though not of the same gravity) saw the Federal Government forced to call a limited Royal Commission of inquiry into misconduct in the banking and financial services sector. That is due to start early next month.
Mr Comyn said yesterday he will aim to rebuild trust in the CBA.
Analysts were surprised at the selection of Mr Comyn because some had thought the bank would appoint an external candidate because internal appointments may be seen as tainted by the scandal.
Mr Comyn has until now run CBA’s biggest division, its flagship retail bank, and before that he ran the CBA’s online stockbroking business CommSec. The retail division is where the AUSTRAC problems emerged with huge deposits being placed in the bank’s cash processing ATMs over a number of years.
Chairman Catherine Livingstone said the board had chosen Mr Comyn because it wanted a leader who could deal with the “regulatory and reputational challenges” facing CBA, while also maintaining momentum in the bank.
“The Board’s main priorities in selecting the new CEO were to identify the candidate who will maintain the momentum in the business, and address the regulatory and reputational challenges and recognise evolving community expectations," Ms Livingstone said.
“The candidate also needs to transform the business and adapt the organisational capability and culture to suit the rapidly evolving competitive and technology-centric environment."
The Royal Commission and the AUSTRAC court case (If it happens, the odds are that the bank and the monitoring group will reach a settlement with a massive fine being paid by the bank).
