Crisis at CBA sees executive bonuses binned

Even after CBA’s top executives are stripped of their ­bonuses, many will still take home more than their counterparts.

Commonwealth Bank chief executive Ian Narev. Picture: Hollie Adams

Even after Commonwealth Bank’s top executives are stripped of their short-term ­bonuses, many will still take home more than their counterparts at the other three major banks.

The analysis by The Australian based on corporate filings, follows the bank’s executive ranks having their bonuses slashed to zero in response to the firestorm over money-­laundering and terror-­financing allegations.

As the fallout from the crisis spread to Canberra, with Treasurer Scott Morrison saying he was prepared to “consider all options”, CBA chairwoman Catherine Livingstone moved to stamp her authority on the nation’s biggest bank by reducing executive ­bonuses from $16 million in 2016 to zero and cutting directors’ fees by 20 per cent.

Mr Morrison said the allegations were “very, very serious”.

The nation’s biggest lender is expected to attract further scrutiny as it hands down an expected $9.8 billion annual profit this morning.

The bank’s embattled chief executive, Ian Narev, also won the backing of Ms Livingstone, who became chairwoman in ­January. “Mr Narev retains the full confidence of the board,” she  said.

Mr Narev remains the highest paid big four bank executive, taking home $12.3m, based on last year’s filings. Even after stripping last year’s $2.9m short-term bonus payments, Mr Narev would have still taken home $9.44m, ahead of Westpac’s Brian Hartzer at $6.75m.

CBA’s chief fin­ancial officer and chief risk officer — key figures with oversight of the Austrac scandal — would also still receive more than their big four bank equivalents despite having their pay docked.

CBA’s head of retail Matt Comyn relies more on short-term bonus payments, which make up half of his pay cheque, but he would still take home more than his ANZ equivalent, last year’s annual report shows.

CBA’s board will also be hit with a 20 per cent pay cut, taking their average fee to the lowest of the big four at $232,000. But as chairman, Ms Livingstone still stands to collect $699,000 on a reduced fee, $9000 more than NAB’s Ken Henry.

As CBA directors completed a three-day board meeting in Sydney, the controversy over the money-laundering allegations spread to Canberra, where the Treasurer told question time the government was ready to “consider all options” in response to the scandal.

A short time later, the government ruled out a banking royal commission.

The threat came after the Treasurer met Ms Livingstone to discuss legal proceedings launched last Thursday by Austrac, which has alleged more than 53,000 breaches of money-laundering and terror-­financing laws.

CBA has said it will lodge a defence to the Federal Court ­action, and that the breaches ­followed a coding error in a ­software update to its fleet of intelligent deposit machines.

While each contravention carries a maximum penalty of $18m, the bank has downplayed the prospect of a massive penalty because the breaches overwhelmingly relate to a single software error.

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.

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 wrongdoing and it’s pursuing it,” he said. Mr 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 he had requested a briefing from Ms Livingstone yesterday morning.

He said he had taken advice from key agencies.