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Bloomberg
Commonwealth Bank of Australia (CBA) Chief Executive Officer Ian Narev has been stripped of his short-term bonus as the lender battles to contain the fallout from allegations it breached money-laundering and terrorist-financing laws more than 50,000 times.
The board decided to scrap short-term bonuses for Narev and other senior executives after “consideration to risk and reputation matters impacting the group,†Chairman Catherine Livingstone said in a statement on Tuesday. “The overriding consideration of the board was the collective accountability of senior management for the overall reputation of the group.â€
Narev received a $2.26 million short-term bonus in the fiscal year ended June 30, 2016, as part of total remuneration of A$12.3 million, according to CBA’s annual report. Full details of his pay for last fiscal year will be published on August 14. The 50-year-old, who has led the bank since December 2011, “retains the full confidence of the board,†Livingstone said.
The allegations from the country’s financial crime agency of “serious
and systemic†non-compliance with money laundering financing laws threaten to overshadow the bank’s full-year results Wednesday, when Narev is forecast to report a record A$9.8 billion profit.
“We think CBA are losing the fight in the court of public opinion,†CLSA banking analyst Brian Johnson wrote in a note to clients on Monday.
The country’s financial crime agency, Austrac, sued the bank on August 3, saying it failed to report on time or at all suspicious transactions totaling more than A$624 million.
Commonwealth Bank also failed
to monitor suspected money laundering even after being alerted by law
enforcement agencies, Austrac claimed. The lender has blamed a software coding error for most of the alleged breaches.
The case adds to a string of scandals in the banking industry, from giving poor advice to wealth-management customers to allegations the nation’s three other biggest banks manipulated a benchmark swap rate.