The major bank has defended its choice to promote its head of retail banking to the role of CEO in the midst of ongoing reviews and reputational damage, adding that it did not want to lose “momentum” in its various remediation activities.
On Monday morning, the big four bank announced that the group executive for retail banking services, Matt Comyn, will replace Ian Narev as chief executive officer on 9 April 2018.
In a media and shareholder briefing later that morning, the bank was questioned as to why it decided to promote the head of retail banking (which has been plagued by a series of scandals, including breaches of counter-terrorism and anti-money laundering laws) to the senior role.
Responding to a question as to why the bank hasn’t sought to “take pressure off the bank” by hiring an external candidate, CBA chairman Catherine Livingstone AO said that the bank was not “in any way attempting to take pressure off the bank”.
Ms Livingstone said that Mr Comyn was the “best candidate” in their search, but she added that ensuring the culture of the bank was preserved and “momentum” was kept across the various remediation activities across the bank was also crucial.
She elaborated: “We are putting a lot of pressure on ourselves in terms of making what we believe should be the highest expectations of our performance and that is why we have invested very heavily in our program of action in responses to the financial crimes compliance issue and, more broadly, across operational risk and compliance risk.
“The importance of maintaining momentum at the moment should not be underestimated.”
Ms Livingstone said: “In conducting the search, we established some very clear criteria and we stick to those criteria in a very disciplined way. I think you know we did a global and local search and considered a significant number of candidates but stuck to those criteria. Of all of those, Matt came out as, compellingly, the best candidate.
“There are people who will talk about culture and the need for culture change, but can I just say the way we think about culture in the bank. Culture is not one big thing; it is made up of quite a number of elements. If you look at the Commonwealth Bank, there are very strong aspects of culture that we would seek for Matt to encourage and nurture. Things like focus on the customer, the importance of innovation through technology. We have a very strong risk management framework when it comes to credit risk, market risk, liquidity risk — those are core elements of culture which are very strong and must be preserved and enhanced.”
However, Ms Livingstone continued: “We do recognise and acknowledged at the AGM that there are other aspects of culture that need improvement and they relate specifically to operating procedures and regulatory compliance risk… That is where we have not performed as we should have, and our expectation going forward is that those two areas and matters under the AUSTRAC investigation are covered by those two areas. But Matt has been very involved in the program of action.
“Matt is very well aware of that, and in fact has taken a lead — and in particularly in the last six months — in that. For that program to continue, one of the advantages of an internal appointment is that momentum will not be lost in terms of the various remediation activities that we are undertaking.”
Speaking of the matter, Mr Comyn said: “I’ve been very involved in the program of action, specifically around AUSTRAC. The broader piece of work which is equally important just looking at the operational processes and particularly the management of risk is a focus today and will continue to be. Of course, I will look to accelerate in that and will [be] participating in a very important review with APRA. We will take the results of that review very seriously and implement those as swiftly as possible.”
He emphasised that he has been at the Commonwealth Bank Group for almost 20 years and that “there are some enormously positive and strong elements” of its culture that he’d like to “enhance and continue”.
Ms Livingstone added: “We absolutely recognise that there are aspects of our operational procedures, operational risk management and our compliance risk management that have not met our own standards, let alone regulator standards or community standards, and that is absolutely the area we are focused on. And from the point of view of this appointment, we believe that maintaining momentum in the work — that is, addressing those issues — is absolutely crucial that Matt will do it. But there is no question that we recognised that there have been issues in the bank which do need addressing and that is what the plan of action, in relation to the financial crimes compliance, is intended to do.”