Commonwealth Bank chief executive Matt Comyn - Photo supplied to the New Zealand Herald by the Commonwealth Bank
from news.com.au
by Alexis Carey
Commonwealth Bank chief executive Matt Comyn has come under fire at the banking royal commission over the payment of staff "bonuses".
Commonwealth Bank of Australia (CBA) is the owner of New Zealand's ASB.
Aussie banks are facing a serious investigation into their culture and practices.
The tough line of questioning from senior counsel assisting the commission Rowena Orr QC follows Commissioner Kenneth Hayne's claims in his interim report that so-called "variable pay" — in other words, bonuses — can actually encourage misconduct among staff members.
While Comyn admitted there were "inherent risks" associated with offering staff bonuses, he struggled to explain why they were necessary instead of simply offering staff fixed salaries.
"We want to make sure that we set an environment where people are striving to do their best and to ensure that their performance is well balanced and appropriate," Comyn said.
"I understand that for the vast majority of people it may be hard to understand why a fixed component would not be sufficient."
"Try and explain it to me," was Orr's blunt reply.
In an attempt to explain, Comyn shared a story about a banker in the UK who told him she did 30 per cent less work after bonuses were scrapped at her institution.
Orr then asked about other ways to motivate staff apart from bonuses, such as promotions or simply helping customers.
Comyn said they were all appropriate suggestions, and that he would not be "unwilling" to scrap bonuses for some roles within the bank — just not his own.
That's because his pay was set by the CBA board, and because shareholders were apparently "very reluctant" to ban financial rewards for those higher up in the chain.
Commonwealth Bank CEO Matt Comyn said bonuses could be scrapped for some roles — just not his own.
Commonwealth Bank CEO Matt Comyn said bonuses could be scrapped for some roles — just not his own.
Earlier today, Comyn also said his bank had failed to prevent misconduct and to identify and resolve it as soon as misconduct was discovered.
He said the bank had been caught in a vicious cycle of reacting to dodgy practices rather than stopping it from happening in the first place.
"We seemed to be caught reacting, responding, remediating, in an ever increasing cycle of that without actually truly understanding the root cause, making the appropriate investments to actually prevent issues from recurring," he said.
"Ultimately that's why I say we get into a period of ongoing remediation without actually fundamentally understanding the root cause in each of those matters and making demonstrable steps to ensure they don't recur."
In her opening statement this morning, Orr said the commission was not interested in hearing any more apologies or promises to improve from Australia's banking heavyweights.
Instead, she said it was time to get to the root causes behind the problems and misconduct uncovered by a number of case studies already heard earlier this year.
Over the next fortnight, the bosses of the major banks will all be questioned at the royal commission along with those from Macquarie, AMP and Bendigo and Adelaide.
Regulators Australian Prudential Regulation Authority (APRA) and Australian Securities and Investments Commission (ASIC) will also be questioned.
The hearing continues.
The New Zealand sharemarket reached its highest level in a month.