K: Financial and Insurance Services

Formula behind CBA’s record $700m penalty revealed

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Original article by James Frost
The Australian Financial Review – Page: 17 : 7-Jun-18

Documents submitted to the Federal Court show that the Commonwealth Bank’s flawed rollout of its intelligent ATMs accounted for $A180m of the $A700m fine that it received for breaching anti-money-laundering and terrorism financing laws. The bank was also fined $A170m for failing to undertake sufficient due diligence on customers who were subsequently found to have been drug traffickers or terrorists. Other penalties included a $A125m fine for failing to provide Austrac with more than 55,000 threshold transaction reports in a timely manner.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, FEDERAL COURT OF AUSTRALIA, AUSTRALIAN FEDERAL POLICE, WESTERN AUSTRALIAN POLICE SERVICE, NEW SOUTH WALES POLICE FORCE

CBA lacked resources to deal with data crisis

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Original article by James Frost
The Australian Financial Review – Page: 13 & 16 : 6-Jun-18

The minutes from a meeting of the Commonwealth Bank of Australia’s data governance committee in August 2016 have been submitted to the banking royal commission. They show that CBA executives were aware that insufficient funding was being allocated to data management, and 118 data quality issues had been identified. Chief risk officer David Cohen told the meeting that improving the quality of credit data was a priority, in order to satisfy the Australian Prudential Regulation Authority’s concerns about the quality of the data.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE

Fels supports cartel case against banks

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Original article by Patrick Durkin
The Australian Financial Review – Page: 19 : 5-Jun-18

The ANZ Bank, Citigroup and Deutsche Bank are facing criminal charges relating to alleged cartel behaviour regarding the sale of shares that were not taken up in an ANZ capital raising in 2015. The first hearing in the case, which has been instigated by the Australian Competition & Consumer Commission, is due to take place on 3 July. Former ACCC chairman Allan Fels says the case against the three companies appears to be a very technical one, and that their lawyers will be working hard to come up with a technical defence.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, CITIGROUP PTY LTD, DEUTSCHE BANK AG, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, AUSTRALIA. DIRECTOR OF PUBLIC PROSECUTIONS, ADLEY BURSTYNER, NRMA INSURANCE LIMITED

CBA cops record $700m hit

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Original article by Michael Roddan, Pamela Williams
The Australian – Page: 1 & 2 : 5-Jun-18

The Commonwealth Bank of Australia has admitted to 53,750 breaches of the nation’s anti-money-laundering and counter-terrorism financing laws. CBA has agreed to pay a record fine of $A700m after reaching a settlement with Austrac. The civil penalty equates to about seven per cent of the bank’s profit for fiscal 2017. ­Austrac CEO Nicole Rose says the fine is "appropriate", while she adds that CBA needs to revamp its compliance systems more quickly than the five-year timeframe it has outlined. She has also warned that organised crime gangs are still actively targeting Australian banks.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF HOME AFFAIRS, AUSTRALIAN LABOR PARTY, REGAL FUNDS MANAGEMENT PTY LTD, CLSA AUSTRALIA PTY LTD, FEDERAL COURT OF AUSTRALIA

ANZ cartel matter unsettles financial community

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 4 : 4-Jun-18

Many legal experts expect that persuading a jury that the parties involved in the ANZ Bank’s cartel case had deliberately sought to break the law will be hard, while others note that a civil case would be easier to win. The Director of Public Prosecutions is pursuing a criminal cartel case against ANZ, Citi and Deutsche Bank on behalf of the Australian Competition & Consumer Commission. A third investment bank, JP Morgan, has been granted immunity from prosecution.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, CITIGROUP PTY LTD, DEUTSCHE BANK AG, JP MORGAN AUSTRALIA LIMITED, AUSTRALIA. DIRECTOR OF PUBLIC PROSECUTIONS, COUNTRY CARE, UNILEVER PLC, BRITISH VIRGIN, CUSSONS

Gupta plans bank for businesses

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Original article by Luke Griffiths
The Australian – Page: 6 : 1-Jun-18

British billionaire Sanjeev Gupta wants to start a business-focused bank in Australia, and is looking at possible acquisition targets. Gupta’s GFG Alliance operates Wyelands Bank in the UK, which targets small and medium businesses, and Gupta says his proposed Australian bank would have a similar focus. Australian Industry Group CEO Innes Willox says such a bank would be welcomed, particularly as borrowing might become harder in the wake of the banking royal commission.

CORPORATES
GFG ALLIANCE, WYELANDS BANK, THE AUSTRALIAN INDUSTRY GROUP, ZEN ENERGY PTY LTD, TUNGSTEN BANK, DIAMOND BAY CLEANING SERVICES, BAILLIEU HOLST LIMITED, ARRIUM LIMITED, GLENCORE AUSTRALIA PTY LTD, DIAMOND BANK

NAB admits it had no right to customer’s house

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Original article by Ben Butler, Elizabeth Redman
The Australian – Page: 23 : 1-Jun-18

National Australia Bank business customer Ross Dillon was cross-examined before the banking royal commission on 31 May. NAB’s Ross McNaughton admitted that the bank had no legal entitlement to use the entire proceeds from the sale of Dillon’s home to pay off the debts of his business. He said that NAB would only have a legal claim to the proceeds if the business defaulted. Dillon maintained that it had never been his intention to solely pay down his business debts with the proceeds from the sale of his family home.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

CBA’s risk overhaul could take five years, inquiry told

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Original article by James Frost
The Australian Financial Review – Page: 8 : 31-May-18

The Commonwealth Bank of Australia’s risk management practices came under scrutiny by the banking royal commission on 30 May. Chief risk officer David Cohen conceded that the bank’s risk function is still inadequate and warned that changes to its risk management systems will not be fully implemented for up to five years. He also expressed the view that CBA needs to "return to the basics" with regard to its risk function.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, BANKWEST, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

CBA shock that Bankwest wasn’t up to scratch

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Original article by James Frost
The Australian Financial Review – Page: 7 : 30-May-18

The business loans portfolio of Bankwest came under scrutiny by the banking royal commission on 29 May. The Commonwealth Bank’s chief risk officer David Cohen told the inquiry that the loan book was reviewed after Bankwest’s acquisition in 2009, and concerns were raised about the quality of the loan book and the procedures used for granting loans. Bankwest CEO Jon Sutton also expressed concern about the quality of its business loan book in April 2009 and again in March 2010.

CORPORATES
BANKWEST, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Strip super from union awards

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Original article by Joanna Mather
The Australian Financial Review – Page: 1 & 8 : 29-May-18

The Productivity Commission’s highly-anticipated report on the superannuation system has recommended major changes to the default fund regime. It proposes that an expert panel – rather than unions or employers – be given responsibility for selecting a list of 10 default super funds. The Commission says this would address problems such workers being locked into underperforming default funds and the creation of multiple accounts when people change jobs. The Commission has also made recommendations on issues such as the number of independent directors on super funds’ boards.

CORPORATES
AUSTRALIA. PRODUCTIVITY COMMISSION, AUSTRALIA. DEPT OF FINANCE, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION