Commonwealth Bank’s price was worth paying

A record penalty allows a bruised CBA to avoid more Austrac charges and to prepare for a return to business as usual.

A $700m penalty allows CBA to walk away from the Austrac scandal and try to start afresh. Pic: Hollie Adams

Commonwealth Bank has earned the dubious honour of bragging rights to the nation’s highest civil penalty, but $700 million is a price worth paying to avoid a further brace of Austrac charges and to start laying the groundwork for a return to business as usual.

That’s not to say a battered and bruised CBA will emerge from its entanglement with the financial intelligence agency Austrac with a shred of dignity.

Right from the start, the bank’s risk, governance and crisis management systems have failed miserably when put to the test, with catastrophic results.

Chief executive Ian Narev has gone, the board has been upended, six of 12 positions on the executive leadership team are vacant, bonuses have been slashed, and the APRA review of the bank’s culture could not have been more damning.

CBA was worn out, its legal position was weak, and there were more pressing, long-term matters to attend to.

New CEO Matt Comyn has to identify credible bankers — both from within and outside CBA’s ranks — to fill senior positions, enabling him to roll out the strategy that led to his appointment instead of putting out raging bushfires.

As for the slimmed down board, it’s met repeatedly since last August, when the Austrac allegations first surfaced.

The agenda has been dominated by Austrac-related considerations, and the point of diminishing returns was reached some time ago.

So, with a best-estimate provision of $375m already booked in the December half-year, it was a no-brainer when the opportunity arose for a $700m settlement, plus payment of Austrac’s $2.5m in legal costs.