Commonwealth Bank CEO Ian Narev to retire next year
CBA denies it was rushed into announcing Ian Narev’s departure by the Austrac money-laundering scandal.
Commonwealth Bank says its chief executive Ian Narev will retire by the end of the 2018 financial year.
The announcement comes after a money-laundering scandal at the bank, with regulator Austrac accusing Australia’s biggest lender of more than 53,000 breaches of anti-money laundering laws.
CBA chairman Catherine Livingstone made no direct mention of that issue in today’s statement, pointing instead to the bank’s CEO succession process and the need to provide certainty for the business.
“Succession planning is an ongoing process at all levels of the bank,” Ms Livingstone said. “In discussions with Ian we have also agreed it is important for the business that we deal with the speculation and questions about his tenure.
“Today’s statement provides that clarity and will ensure he can continue to focus, as CEO, on successfully managing the business.”
The exact timing of Mr Narev’s retirement would depend on the outcome of an ongoing comprehensive internal and external search process.
Ms Livingstone this morning denied the timing of Mr Narev’s departure had been brought forward and said succession planning had been under way before Austrac filed civil proceedings in the Federal Court on August 3.
“This statement has not been rushed,” she told journalists.
Ms Livingstone downplayed the prospect that Mr Narev would be a “lame duck CEO”, given he will leave within the next nine months and not be able to implement the bank’s response to Austrac.
Mr Narev was “absolutely” the CEO, she told journalists.
“We do have a board committee with four independent directors and which will have oversight of Austrac and the follow through of the program of action.”
Ms Livingstone said shareholders were always mindful of chief executive succession.
“Ian is approaching the end of his sixth year in the role, I think you would expect at any organisation that discussions occur with the CEO as they go into the longer period of his tenure the discussion, it is an active and a continuous one,” she said.
Pressure has been mounting on CBA after the government’s financial-intelligence agency launched a civil suit in the Federal Court and the securities regulator followed up last Friday with news it had begun its own investigation.
Austrac’s lawsuit earlier this month alleges tens of thousands of compliance failures that opened the bank up to money laundering. Each breach carries a maximum penalty of $18 million.
CBA last week announced Mr Narev and senior executives would lose their bonuses for last financial year in the wake of the Austrac scandal.
The release of CBA’s annual report this morning confirmed Mr Narev’s short term bonus was stripped and he was paid $5.5 million for the 2017 financial year. The annual report also revealed that Mr Narev’s $12.3 million pay in 2016 was cut to $8.76 million after the bank clawed back $4.83 million in long term bonus payments.
Ms Livingstone said last week Mr Narev “retains the full confidence of the board”.
As the bank last week announced a $9.88 billion cash profit, Mr Narev admitted mistakes had been made in the Austrac affair.
Ms Livingstone last week acknowledged the reputation of the bank and the industry has been affected, and said a committee had been set up to deal with the bank’s handling of the allegations. However, she said there was no reason to believe the allegations stemmed from deliberate or unethical behaviour or from any profit motive.
The Austrac allegations relate to the use of the bank’s “intelligent deposit machines,” a type of ATM that allows anonymous deposits of up to $20,000 in cash at a time to be automatically credited to accounts.
Austrac’s allegations largely relate to a failure to provide timely reports on transactions above a $10,000 threshold over about three years from 2012, as well as accusations it failed to report suspicious transactions on time or at all and that even after it became aware of suspected money laundering of not monitoring customers.
Mr Narev has been CEO of the Commonwealth Bank since 2011.
With Dow Jones
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