Despite delivering shareholder wealth during his tenure, Ian Narev has been at the helm of a number of scandals.
Only last week Ian Narev told SBS World News he’s still the right man for the job.
“I’ve got a lot of energy to bring not only to the challenges immediatly relating to the Austrac claim but also the other challenges and opportunties that we have and I’m very committed to it and the board has the same view.”
But the board has now confirmed Ian Narev willl retire by the end of the 2018 financial year.
The 50 year-old has managed to lift Commonwealth Bank’s share price by nearly 65 per cent since he took the top job at the end of 2011.
But he’s been under pressure since Australia’s financial intelligence agency, AUSTRAC [oz-track], accused the bank of breaching money laundering and terrorism financing laws.
“We know our responsibility to work with Austrac and the Federal Police on stopping crime. We’ve said we’ve made mistakes here. We’ll work our way through the specifics of the claim but the starting point has to be, we take these seriously, we take the partnership seriously. We’ve made mistakes. We need to respond accordingly.”
Last week Austrac launched civil penalty proceedings in the Federal Court, accusing the bank of systemic failure.
The bank is also being investigated by the corporate regulator, *ASIC, over its response to allegations it had violated money laundering and terrorism financing laws and breached the Corporations Act.
ASIC says it should have been alerted by Australia’s largest bank in 2015, when it first learnt of a problem in its cash deposit machines that led to the money laundering case filed last week by AUSTRAC.
Judith Fox, from the Australian Shareholders Association, says the board appears to have taken some action.
“The board has stepped up to the plate on this one. Early on when this first arose, they cut short-term bonuses they took a haircut themselves, which is extraordinarily rare. And we all said, okay what other accountability measures are you going to put in place? And now we’ve seen them. The clawback mechanisim is really more about the board saying we actually recognise that accountability has to be taken at that very senior level, it’s not even that you were necessarily involved but if you are at the senior level of an organisation, you are accountable for what happens on your watch.”
One of the biggest changes has been Mr Narev’s salary.
The bank’s annual report reveals his $12.3 million remuneration was cut to just under $9 million for the 2016 financial year after the board cut long-term bonus payments.
In the financial year to June 2017 he was paid $5.5 million.
Michael McCarthy, from stockbrokers CMC Markets, says while Ian Narev’s tenure as the bank’s head will be seen favourably, many will now be relieved.
“From the point of view of the Bank’s board, this draws a line under the recent Austrac affair. They’ve taken decisive action, the CEO’s leaving and that will be seen as good news not just by shareholders but also in Canberra.”