- NAB chief executive Andrew Thorburn says there are lessons to be learned from the APRA report into the Commonwealth Bank’s governance
- The report points to “cultural aspects” which are crucial to banking, he says.
- “We are very mindful of expectations the community places on us.”
The report by APRA (Australian Prudential Regulation Authority) into governance failings at the Commonwealth Bank was rushed to the board of directors of competitor NAB as soon as it was released.
The regulator described the Commonwealth’s culture as “insular” where learning from experiences and mistakes was ignored.
The bank’s board of directors also had “inadequate” oversight of emerging non-financial risks and its senior executives had a lack of ownership of key risks.
“The report came out on Tuesday and we got it immediately to the board (of the NAB). We briefed the board and went through the executive summary,” NAB CEO Andrew Thorburn told a media briefing on the bank’s half year results.
He hasn’t yet had time to study the report in detail but says it’s helpful to take such reports and personalise them.
“If we inserted NAB for CBA would that be us and what do we need to improve?” he says.
“I think we really need to take things like this and learn and not reject them. This is the way we are going to get better and culture is so crucial.
“And that report, which I think is balanced and fairly written, points to cultural aspects that we really need to learn from as well.”
The banks have been caught up in a series of scandals including providing poor financial advice to customers. These are being investigated by the financial services royal commission.
The Commonwealth also faces court action over breaches to anti-money laundering regulations identified by AUSTRAC, Australia’s financial intelligence and regulatory agency.
Thorburn says the banking industry is operating under increased community scrutiny.
“These are unprecedented times in banking and I think this presents a real burning platform for us and an opportunity for generational change,” he told the briefing.
“I think we can really face into some things here and make our bank, and our profession, really strong and respected again.
“And that will happen when we own issues, when we fix them and we develop our culture and we act.
“Now that’s the first thing. The second thing is that I think at NAB we have got the right plan.
“We are investing $4.5 billion over the next there years to focus on our clients, to make the bank simpler and faster and the capture growth opportunities.”
Thorburn also referred to the financial services royal commission, which is investigating wrongdoing by the banks, as well as APRA’s governance report into the Commonwealth.
The NAB today announced a 16% fall in cash profit to $2.76 billion for the half year as restructuring costs weigh on the bank.
In the NAB’s results announcement, Thorburn says the bank is operating in an environment of constant change, and heightened political and regulatory scrutiny.
“As we continue to participate fully in the Financial Services Royal Commission, we are very mindful of expectations the community places on us,” he wrote.
“We will keep listening to our customers to understand how we can improve and build a better bank for them.”
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