Morningstar analyst David Ellis wrote this week that he was “initially surprised” with Mr Comyn’s promotion and warned of potential headwinds for the new CEO.
“We do see some short-term risks that the new CEO may be tarnished by the upcoming AUSTRAC court case outcome, the APRA prudential inquiry and the Royal Commission,” Mr Ellis said.
CBA announced Mr Comyn’s appointment on Monday morning. Chairman Catherine Livingstone explained that the board had reached its decision after a “thorough global and local search for the role identified an exceptional field of candidates”.
Morningstar’s Mr Ellis is confident that an external appointment, particularly an offshore executive, would have likely implemented a “major strategic review to determine what has gone wrong with the diversified group and what has caused the string of missteps during the past few years”.
UBS analyst Jonathan Mott said that Mr Comyn is “well regarded by the market”, having delivered strong, consistent shareholder returns in his time heading up retail banking.
However, the analyst said that the 42-year-old retail banking boss will face many challenges, including delivering cultural change to an executive team that he has helped shape in recent years.
Mr Comyn will also have to carefully address reputational damage, technological disruption, an over-leveraged household sector and a slowing housing market.
“Steering CBA though the Royal Commission, the APRA investigation and ongoing legal proceedings will also be a key determinant of Matt’s success,” Mr Mott added.
According to Mr Mott, it is difficult to estimate the impact of AUSTRAC’s anti-money laundering allegations or the banking Royal Commission.
“We are concerned that CBA may be required to adjust its financial objectives if APRA finds that these are not consistent with risk and compliance outcomes. Further, we believe the Royal Commission may look into potential mis-selling and responsible lending issues across the sector,” the analyst said.
“Both of these have the potential to lead to a material reduction in shareholder returns. We do not believe the market is currently pricing in these potential outcomes.”
However, the bank has defended its internal hire.
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”.
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 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.”
[Related: CBA defends new CEO hire]