The Commonwealth Bank of Australia (CBA) is facing yet more uncertainty after it was announced that its CEO and managing director Ian Narev will be retiring by the end of this financial year.
"Succession planning is an ongoing process at all levels of the bank. In discussions with Ian, we have also agreed it is important for the business that we deal with the speculation and questions about his tenure. Today’s statement provides that clarity and will ensure he can continue to focus, as CEO, on successfully managing the business," CBA chairman Catherine Livingstone said in a statement early yesterday morning (14 August). The exact timing of his departure will depend on the internal and external search process.
Narev has held the dual role since December 2011. The retirement announcement comes on the heels of ASIC confirming it would be investigating CBA over its conduct in a recent money laundering scandal. That investigation involves the bank failing to report over 50,000 alleged breaches of money laundering and terrorism financing laws with the transactions valued at more than half a billion dollars.
During a news conference later yesterday, Livingstone disputed the statement that the retirement and succession announcement had been rushed.
"It has been carefully considered and the board formed the view, in conjunction with Ian, that if we provided this statement and clarity as to the timing, then it would enable Ian and the team to focus back on, as I say, the running of the bank," she said.
"We have full confidence in Ian as CEO, and as I said, the ongoing CEO succession process is something which you would expect to be happening given Ian is at this point in his [sixth year] tenure."
Livingstone said the board will continue to hold the CEO to account, as it has done, in terms of all the actions of running the bank to make sure it is a successful business.
While Livingstone couldn't speak to who in particular would be considered to take over the role, she said the board is looking for someone who has strong personal values, "complete transparency", a collaborative working style, and "a very strong moral compass".
"Because in these roles, as you know, the right and wrong are clear but the judgment calls made along the way can be very challenging and we need someone with a very strong sense of that moral compass. And as you know those are the qualities that we have currently in Ian. And we would seek to ensure that we would have those in his successor," she said.
CBA's annual report showed Narev's remuneration in the last financial year was $5.5m, down from $12.3m last year.
The report also showed Narev missed out on a bonus that could have been worth several million dollars, while five other senior executives also had their bonuses cut to zero.