Commonwealth Bank's Success `Dulled Senses,' APRA Inquiry Finds
Commonwealth Bank's Success `Dulled Senses,' APRA Inquiry Finds
(Bloomberg) -- Commonwealth Bank of Australia’s continued financial success “dulled the senses” that may have alerted senior management to increased risk, a report into the lender’s governance and culture found.
“A widespread sense of complacency has run through Commonwealth Bank, from the top down,” according to the inquiry, which was commissioned by the banking regulator after the nation’s largest lender was sued for repeatedly breaching anti-money laundering laws. “Commonwealth Bank was desensitized to failings with customers.”
In response to prudential concerns raised by the report, a A$1 billion ($753 million) add-on has been applied to Commonwealth Bank’s minimum capital requirements, the Australian Prudential Regulation Authority said in a statement Tuesday.
The bank’s reputation has been battered by a succession of allegations about its mistreatment of customers, from giving poor financial advice to failing to honor insurance claims.
The report is another headache for new Chief Executive Officer Matt Comyn, who is already dealing with the fallout from the inquiry into financial system misconduct, accusations the bank manipulated a benchmark interest rate and threatened class action lawsuits, after succeeding Ian Narev last month.
Read more: Comyn marks first day as CEO by saying ‘sorry’
Commonwealth Bank shares have slumped 14 percent since the scandal broke in August, as investors price in the potential cost of the scandals and the likelihood of more regulation.
The bank has set aside A$575 million for potential fines and to cover the cost of dealing with regulatory probes and compensating customers it mistreated.
To contact the reporter on this story: Emily Cadman in Sydney at ecadman2@bloomberg.net.
To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Peter Vercoe, Edward Johnson
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