Concerns around governance, culture and accountability within the Commonwealth Bank (CBA) have prompted the Australian Prudential Regulation Authority (APRA) to announce an independent inquiry into the lender.
According to APRA Chairman Wayne Byres, the panel would consider the lender’s frameworks and practices in relation to the governance, culture and accountability to determine whether they conflict with sound risk management and compliance outcomes.
“CBA is a well-capitalised and financially sound institution,” Byres said. “However, beyond financial measures, it is also critical to the long-run health of the financial system that the Australian community has a high degree of confidence that banks and other financial institutions are well governed and prudently managed.
“The Australian community’s trust in the banking system has been damaged in recent years, and CBA in particular has been negatively impacted by a number of issues that have affected the reputation of the bank. Given its position in the Australian financial system, it is critical that community trust is strengthened. A key objective of the inquiry will be to provide CBA with a set of recommendations for organisation and cultural change, where that is identified as being necessary.
“The Chairman and CEO of the CBA have assured me that the bank will fully cooperate with the inquiry, and APRA welcomes that cooperation.”
The names of the panel members and the agreed terms of reference will be finalised and published by APRA at the commencement of the inquiry, the costs of which will be met by CBA. It is anticipated that the panel will provide a final report to APRA around six months from the formal commencement of the inquiry, and that this report will be made public.