Treasurer Scott Morrison says he expects more executives at Commonwealth Bank of Australia to lose their jobs after a “damning” report by the banking regulator.
The Australia Prudential Regulation Authority (APRA) released its final report of an inquiry into Comm Bank on Tuesday over events leading to allegations that it broke anti-money laundering and counter terrorism financing laws on almost 54,000 occasions.
APRA said the Comm Bank’s framework for managing risks were “cumbersome” and senior leadership was slow to react to emerging threats.
As a consequence of the report, APRA ordered Comm Bank to carry an additional $1 billion in regulatory capital and enter into an enforceable undertaking to conduct remedial action.
The report concluded the lender’s governance, culture and accountability frameworks and practices were in need of “considerable improvement”.
Treasurer Scott Morrison described the report as “damning”, saying he expects more Comm Bank executives will be forced to resign.
Mr Morrison told reporters in Canberra the report found there was a “complacent culture, dismissive of regulators, an ineffective board that lacked zeal and failed to provide oversight”.
The treasurer also pointed to “a lack of accountability and ownership of key risks by senior executives, a remuneration framework that had no bite”.
“While CBA is a sound financial institution … that rap sheet that I’ve just read out from APRA is very damning,” he said.
“The report, I think, is required reading not only for every financial institution in this country but, frankly, it should be the next item on the agenda of every single board meeting in this country regardless of whether you’re a bank or not.
“It goes to the heart of what responsibilities of board directors are.”
Asked what the CBA board should do, Mr Morrison said a number of board members and executives had already gone.
“My understanding is there will be others who will be leaving and that’s what I expect to happen,” he said.
According to APRAL, “CBA’s continued financial success dulled the senses of the institution” particularly in relation to the management of non-financial risks.
APRA chairman Wayne Byres said CBA’s governance, culture and accountability practices needed considerable improvement.
Asked what people should make of the big banks, which enjoyed the protection of taxpayers during the global financial crisis via a government guarantee, Mr Morrison said Australians should be as disappointed as he is.
But he stressed the government was taking action, citing the “permanent” bank levy included in last year’s budget.
The levy is expected to raise $16 billion by the time the government’s planned corporate tax cuts have through the economy.
Labor leader Bill Shorten said the findings were very serious, coming on the back of recent hearings of the financial services royal commission.
“It’s almost like a fire hose of bad news coming at Australians … about our banks,” he told ABC radio.