Govt prepared to consider all options on CBA: Morrison

Scott Morrison has turned up the heat on CBA after chairman Catherine Livingstone’s move to slash bonuses.

The CBA board says Ian Narev retains its full confidence. Pic: Hollie Adams

Scott Morrison turned up the political heat on the CBA in question time by saying the government was prepared to “consider all options” in responding to the scandal -- although a royal commission was ruled out a short-time later by his office.

The open ended threat came after the Treasurer met in person with CBA chair Catherine Livingstone to discuss the legal proceedings initiated against the bank by the Australian Transaction Reports and Analysis Centre which has alleged more than 53,000 breaches of anti-money laundering and terror financing laws.

“I’ve made it very clear to the Commonwealth Bank that, in relation to these matters, the government’s response is prepared to consider all options and that remains our view,” the Treasurer said.

Bill Shorten seized on the legal proceedings yesterday to press the government over its refusal to back Labor’s demand for a royal commission into the banking sector. “How many more scandals will it take before the Prime Minister finally supports Labor’s call for a royal commission into the banks,” he asked.

Malcolm Turnbull responded by defending the existing system, arguing that AUSTRAC had “done its job” by commencing legal action against CBA.

The Prime Minister also warned that Labor’s push for a royal commission would only mean “delaying or staying the legal proceedings.”

“AUSTRAC is on the case… it’s uncovered the wrong-doing and it’s pursuing it,” Mr Turnbull said.

Scott Morrison said the allegations against the CBA were “very, very serious” and revealed he had been briefed on the issue in detail by AUSTRAC on Monday before requested a briefing from Ms Livingstone.

The briefing took place on Tuesday morning, with Mr Morrison saying he had also taken advice from key agencies including the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission as well as Treasury.

A spokesman for Mr Morrison said that the Treasurer and Ms Livingstone had a “courteous, professional meeting that was focused on the issues at hand.”

Meanwhile, Commonwealth Bank shares closed 1.07 per cent lower on Tuesday, at $80.65, with investors taking a dim view of the bank’s move to slash senior bonus payments.

Commonwealth Bank has slashed to zero the 2017 bonuses for chief executive Ian Narev and senior executives in the wake of the money-laundering scandal.

But as the CBA board moved to head off more reputational damage in the wake of the Austrac affair, chair Catherine Livingstone said Mr Narev “retains the full confidence of the board”.

Bank directors have also taken a 20 per cent pay cut in the wake of Austrac allegations the bank has committed more than 53,000 breaches of anti-money-laundering legislation.

In a statement today the board noted the heightened anxiety about bank pay levels and the civil case launched last week by Austrac.

“Therefore, in advance of the presentation of CBA’s financial results tomorrow, the board advises that it has decided to reduce to zero the short-term variable remuneration outcomes for the CEO and group executives for the financial year ended June 30, 2017,” Ms Livingstone said.

“In reaching this conclusion the overriding consideration of the board was the collective accountability of senior management for the overall reputation of the group.”

The CBA executives were up for as much as $20 million in short-term bonuses, but will now receive nothing for the year to June 2017. Last year they took home $16 million in short-term bonuses.

Last year CBA copped a 49 per cent vote against its remuneration report.

Last year the then CBA chair David Turner picked up $874,195 in pay including superannuation which means this year Ms Livingstone will cop a $174,000 pay cut to around $700,000.

Mr Narev picked up $15,000 worth of stock and $2.8 million in cash, with $1.4 million deferred as part of an $8.8 million pay cheque. A motion to seek approval for a share allowance to Mr Narev was removed, with the remuneration report rejected.

CBA directors earn around $300,000 a year so will take a $60,000 pay cut.

The board decided to leave long-term incentives in place pending the outcome of the Austrac matter.

Full details of remuneration outcomes would be disclosed in the annual report next week, CBA said.

CBA’s moves follow a board meeting yesterday and ahead of its financial results tomorrow.

The bank is preparing its defence to allegations of breaches of anti-money-laundering laws.

Austrac alleges CBA failed to provide on-time reports of 53,506 cash transactions of $10,000 or more and totalling $625 million that were made through the bank’s new intelligent deposit machines (IDMs) from November, 2012 to September, 2015.

In a statement yesterday, CBA said a coding error, which occurred following a software update to its IDMs in late 2012, was responsible for the required Threshold Transaction Reports (TTRs) not being generated.

CBA said the fault was fixed within a month of it being discovered in 2015.

It also said yesterday that one of the factors the Federal Court would take into account when determining a penalty was the extent to which any breaches arose from a single course of conduct.

For example, Austrac alleged that over 53,000 threshold transaction reports were not lodged, with each failure attracting a maximum penalty of $18m.

CBA, however, said each breach could be seen as originating from a single course of conduct — the systems coding error.