Terry McCrann: CBA’s choice of new chief down to limited options

AT almost any point in the Commonwealth Bank’s 106-year history, the elevation of 42-year old rising star Matt Comyn to the top job would have been universally acclaimed and even demanded, writes Terry McCrann.

AT almost any point in the Commonwealth Bank’s 106-year history, the elevation of 42-year old rising star Matt Comyn to the top job would have been not simply uncontroversial but universally acclaimed and even demanded.

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The CBA is Australia’s biggest and most profitable and in recent times also easily the most successful bank.

A huge part of that has been the basic retail bank — the part that deals with you and me — that Comyn has run since 2012.

If anyone was the “natural successor”, indeed, even the “groomed successor”, to the dynamic CEO, Ian Narev — who until six months ago was easily the most dominant public personality in Australian banking — it was Comyn.

Until almost exactly six months ago. Until August 3 last year to be exact.

That was the day the news of CBA’s 53,700-odd alleged money laundering infractions exploded into the public arena.

Now the CBA — and both its then-current CEO Narev and his predecessor, Ralph Norris — had run through and emerged seemingly successfully unscathed from a series of, to use a neutral term, “customer issues”. Storm Financial, CommInsure. Financial planning rip-offs and so on.

But the Austrac bombshell seemed to finally snap the twig; to cut through. Suddenly, “everything” changed, almost literally overnight, in relation to the CBA, the position of its CEO and the four big banks more broadly.

Commonwealth Bank chair Catherine Livingstone, centre, announcing today that chief executive Ian Narev, left, will be succeeded by Matt Comyn, right. Picture: Britta Campion

On August 2, Narev was riding high and probably for some years yet in his near $10 million job. On August 4 he was heading for the door and recently appointed chairman Catherine Livingstone was starting the search for a new co-leader.

More broadly, the CBA would find itself in the unique — and uniquely humiliating — position of having an APRA-initiated inquiry into its “culture” — read: failed or toxic culture — and only its culture.

While it and its four big bank peers were then also irresistibly headed for the first royal commission into banking in Australia in 80 years; A royal commission that could reasonably be called the CBA (and others) royal commission.

Thank you very much, pal, four (other) bank CEOs could well have muttered.

That makes Monday’s appointment, at the very least “courageous”. In both senses of the word — the normal and the “Yes, Prime Minister” version.

For Comyn is not just any old “CBA insider” but in comparison with his peers the ultimate insider.

Apart from one very brief mid-career move outside, he’s been with the CBA almost his entire working life, having joined in his early 20s.

New Commonwealth Bank chief executive Matt Comyn. Picture: James Croucher

IF “culture” is the problem, it seems at least counterintuitive to select someone to lead the bank through both the coming regulatory and potentially seminal structural turmoil, someone who is not only steeped in that culture but was self-evidently a major, working, senior executive, contributor to creating it.

Clearly, the chairman does not agree. And does not agree on a number of interesting levels. Speaking to her on Monday, she absolutely rejected what she described as the “omnibus term culture”.

There were aspects of the CBA’s culture that were negative but there were aspects that were positive.

The explanation for the Comyn selection that she proffered was that he was the best person to sustain the momentum of the, to paraphrase, “good culture”.

But also, very interestingly, that he was the best person to address the “bad culture” aspects around regulation and compliance.

To my mind there are two ways to look at both the appointment and the Livingstone explanation.

That both chairman and board just don’t get it; that you can’t disaggregate “culture”; and so they see CBA’s “bad” as essentially one only of operational and regulatory process failure.

The other way is that chairman and board have actually managed to both face up to and indeed potentially successfully merge the two conflicting elements of the complex challenge they were presented with.

Mark Knight’s perspective on the CBA money-laundering scandal.

How to deal with all those “issues” without at the same time crippling the bank’s performance. It needs to make a profit, not only for shareholders but indeed to have a “successful culture” in the way outside critics see and demand it.

Clearly, Comyn very cleverly and self-evidently successfully projected himself to the board and especially to the chairman as the “solution” not as (a near 20-year part) of “the problem”.

Livingstone stressed how he had been “deeply involved” in getting to the “root causes” of the CBA problems and in projecting the best ways to address and indeed solve them.

This makes for very, very interesting reading what will be said in the progress report from the special APRA inquiry into the CBA’s culture (singular), which will coincidentally — coincidentally? — surface tomorrow.

I asked her whether the option of bringing in an “outsider” had been hindered by the need to cut the new CEO’s pay compared to that of the departing Narev.

Her rejection was emphatic but not explicit, when she said that remuneration was not a “constraining factor” in developing a “slate of candidates”.

Again with the timing, there are two exactly opposite perspectives. That it was just awful, coming just as the RC gets underway AND as the APRA conclusions surface AND as the Austrac fine (which I think will run to maybe $500 million or so) hits.

On this view that’s about as close as you get to two very public fingers.

Or that it is exactly right. That the switch had to be made ahead of these tidal waves and Comyn was the best person to be given the wheel.

We shall see.