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Insider view from the top of CBA

Editor’s introduction

At the Financial Services Royal Commission, both the CEO of CBA, Matt Comyn, and the Chair, Catherine Livingstone, strongly criticised their predecessors. Ms Livingstone said there was a misplaced confidence by the board, where directors held brief meetings and failed to ask for additional reports. She cleaned out management, including CEO Ian Narev, and built a fresh board. When Matt Comyn was asked whether CBA’s previous leaders had been the right people for the job, he replied, “No”.

On 21 and 22 November 2018, the Australian Financial Review reported:

“In July 2011, it was announced that the 44-year-old Narev would become the bank's next CEO. In turn, Narev proceeded to hire highly intelligent, well-educated and extremely ambitious young people from outside the CBA to fill the bank's top executive positions, although he did appoint one of the CBA's young rising stars – Matt Comyn – as head of the bank's vitally important retail banking operations.

"Unlike previous CBA chiefs, they noted, he encouraged his team to work together, rather than adopting the divide and rule approach. But this emphasis on harmony meant that Narev was uncomfortable arbitrating on the inevitable conflicts that arose between the bank's different business units, and found it even more difficult to punish members of his executive team when they failed to deliver.”

Then quoting from a source who asked not to be identified, the AFR reported:

“The insider said Narev's lack of operational experience and his lack of inquisitiveness meant that he delegated responsibility for operational issues to others. Also, he was unwilling to sack people who had not performed.”

"Ian was a great delegator of authority. His go-in stance was: if I ask you to do something I expect you to do it. He was not afraid to challenge you and he was always open for you to come to him with problems."

"Overconfidence, bred from financial success, meant that serious gaps in CBA's controls for non-financial risks were overlooked."

Insights from Garry Mackrell

I was a member of Commonwealth Bank’s Executive Committee (Exco) for 13 years until 2010. My roles included Head of Strategy and Head of International. I retired a year before Ralph Norris finished as CEO and before David Turner became Chairman, so I did not see Ian Narev in the top job first-hand. However, I was an ASB Board member alongside Ian Narev and Ross McEwan (the other candidate for the CEO role) and I saw many Board and Exco interactions, including observing the up-and-coming Matt Comyn.

I can say with absolute certainty that all are people of honesty, integrity and good character. But given the revelations of the Royal Commission, what went wrong?

Expectations change over time

I am sure that in hindsight, different decisions could have been made, but CEOs and boards make decisions at the time that others are not empowered to make. The lens they look through changes over time. What was right and proper years ago may look wrong today.

I am constantly amused by the so-called experts denigrating CBA’s ‘toxic’ culture. Few of these experts with loud opinions have worked at the top of a large public company. I think the stuff about culture is mostly rubbish.

I worked for six CEOs and as many chairs, and served on innumerable boards in eight countries. The people I worked with all had different personalities, styles, strengths and weaknesses. And for half my career at CBA, it was government-owned before it became a public company in 2001 with David Murray as the first CEO.

I believe the law of unintended consequences came into play.

Adjustments in responsibilities and accountabilities

Regulators were concerned about the potential for bank CEOs to have too much power, so they wanted heads of departments of Risk, Audit and Finance to be more directly accountable to boards. This led to a weakening of the power of business units as risk and compliance responsibilities were increasingly centralised in head office. The centre became all-powerful and lines of businesses increasingly fragmented. Decision-making was more and more bureaucratic. Inadvertently, operational risk in front office and business lines became much larger than management realised. Problems in the trenches and running up and across business lines got lost in the maze. The understanding of the business drivers of Wholesale Markets, SME, Retail, Wealth and Insurance were weakened by the overly-centralised function.

In my view, the fundamental issues in recent years were that the Chief Financial Officer (David Craig) and the Chief Risk Officer (Alden Toevs) assumed too much power in the APRA-sanctioned model. Craig and Toevs were both technically strong but in their middle-level management, there was a narrower field of knowledge lacking experience in operational matters across all activities. In particular, when the Basle 3 rules came in, capital attribution became incredibly complex. The application to credit and market risk was mostly appropriate, but operational risk models had little precedent and were underestimated. This has since proven to be a far more significant risk than expected, as shown by the Royal Commission and earlier events.

Finally, business divisions and head office functions became silos. The general trend to specialisation and centralisation meant that the career bankers of old, many of whom started in branches and became cadets and therefore moved around the organisation as they moved up, no longer existed in senior positions. Many of these long-term career bankers had come from interstate and regional areas with real world experience (does this sound familiar re current political shortcomings?).

Most new senior executives (other than Matt Comyn) came from outside the bank, often straight into senior roles, with little practical understanding of either front-line operations or adjacent business lines. They couldn't and didn't know what was going on further down the line, or more critically across the chain, and didn't know what questions to ask and what to look for.

With increasing numbers of senior external appointments, company loyalty becomes largely irrelevant. We used to share stories of past legendary leaders and what they instilled in the troops. This was replaced by financial reward and a focus on the next career move. It doesn’t engender teamwork and a focus on customer service and efficiency.

The experts who call for outside appointments to change the toxic culture have it the wrong way around. Apart from Matt Comyn, I don't think any senior leader really has had a career in the current CBA in the fullest sense, unlike most of the risk managers of previous decades.

Different CEOs, different styles

David Murray's style was ‘presidential’ in that division heads ran fiefdoms and fought for their own corner. Decisions were made on the basis that they argued for their department and he would decide. At AMP, he will certainly be analytical and strategic, forget soft and fluffy.

Ralph Norris did not like the fiefdoms and ran a more collegiate process. We discussed the issues and argued our case and then he would decide. Once he decided, that was it, there was no trying to renegotiate.

The common claim under Ian Narev that there was not enough challenge and CBA became too collegiate, was in my view, because the executives did not know what to ask.

It was a complete contrast to the senior committee brawls that happened in the Murray and Norris eras. We knew a lot about the other businesses and we were not afraid of confrontation. We spoke with knowledge and experience.

Remuneration and market disclosure

When disclosure of senior executive salaries became mandatory, the then Chairman John Ralph said this would not end well. It would lead to endless upgrades in packages as egos and entities fought for their key talent in the public domain, much like international soccer players of today.

The Royal Commission seems to believe that bank staff should not get bonuses and only earn a fixed salary. When I first joined CBA, there were no bonuses and we received a promotion if we did well. Pay levels were below competitors and we were called the Commonwealth Training Bank. If a salary-only rule is introduced for banks, the plodding bureaucrats will stay and the smart, ambitious people will go elsewhere including overseas. If society wants innovation and competition in banking, the salaried model is not going to fly. I also note that if lawyers do well and work hard, they eventually become partners and share in the overall profits of the firm.

Related to this was the move to quarterly financial upgrades. Markets became fixated with short termism and this has fed into a constant focus on meeting or exceeding budget as opposed to longer-term value creation. It is especially so in Australian banks where dividends are more important than capital growth, particularly when relevant capital gains taxes and dividend imputation are factored in.

Colonial First State and vertical integration

There has been a lot of uninformed tosh written about the CBA's supposed suboptimal misadventures in vertically-integrated businesses. Clearly, a lot of time and water has passed under the bridge since the Colonial acquisition and many lessons have been learned, both positive and negative.

The strategic considerations behind acquiring the Colonial Group were several.

One tactical element was that, while the Four Pillars policy remained set in stone, bank growth was constrained. CBA had suboptimal market positions in life insurance and superannuation, and mandatory super was threatening to move domestic savings from bank deposits to wealth products.

Moreover, as a scale intermediary with nearly half the retail customer base of Australia, it was critical that CBA stay at the epicentre of emerging product flows (including on and off bank balance sheet items and derivatives) in both wholesale and retail markets.

This extended to origination but more particularly distribution of equities arising from the privatisation and demutualisation of businesses. A broad retail customer base for the first time was investing in equities, which led to the launch of CommSec.

The Colonial acquisition came in three parts. First, the cost extraction synergies of Colonial State Bank paid for the entire deal within three years. Second, asset manager Colonial First State was destined to grow at a multiple of general asset formation. But third, insurance was a mess, and if CBA had its time again, it should have offloaded the insurance group immediately, rather than spending an enormous effort trying to clean up myriad legacy systems, etc.

I am convinced that Colonial First State remains a valuable growth business. The demerger will be fascinating to watch. The differences and contrasting legal obligations of banking versus wealth will always be a challenge but the fiduciary and other conflicts of interest can be solved. There is too much value along the value chain to meekly fold the tents to political correctness that vertically-integrated businesses are bad.

Open markets should foster, not inhibit, strategic choices, while operating in regulatory frameworks which seek to balance system safety and transparency. If the lawyers’ picnic results in legislated fire walls and caveat seller not buyer, the limited market that is Australia will revert back to small, undercapitalised risk-averse players. Most will lack the capital to withstand major exogenous shocks or the wit or will to compete in offshore markets.

On financial advice, the end result of the Royal Commission’s headline seeking will ultimately be a critical shortage of people willing and able to provide advice backed by capital. The losers will be the Australian public, the opposite result to what the politicians claim is their objective. Moreover, those independent adviser groups left in the game will be under pressure to make a living. If the Commission insists on removing trailing commissions, few advisers will be interested in serving customers over the term of their investments. They also will not have the capital to compensate customers when things go wrong, as they often do.

With Labor also targeting SMSFs via the franking policy and proposing to increase capital gains tax, ordinary individuals will be even more uncertain what they should be doing, other than becoming dependent on handouts.

Mistakes are inevitable but some are unacceptable

I can excuse lots of stuff-ups like charging dead customers and the outdated actuarial tables, and I personally think the CBA-related BBSW arguments are a try-on. Every day, the rate set results in wins and losses even if the dealers try to boost their book profit, but no retail customer was ever remotely affected.

The aspect that I find inexcusable, because it tells me the people didn't know what they were doing or monitoring, was the $20,000 cash transactions and money laundering mess. It says the approval process, the systems monitoring, the reporting and the follow ups were done by incompetents who didn't understand what they were doing. Again, as to delineation and spans of responsibilities, under David Murray, more authority was held by the business units. Under Ralph and Ian, it became more centralised in Finance and Risk under stipulation by APRA. The business process chains were increasingly sliced and diced.

The danger of mandated social objectives in business

There are moves in banking regulations to incorporate social objectives into formal governance and company legislation. The drafts I have seen dealing with company objectives do not mention shareholder value. I can say with absolute certainty that requiring companies to commit to a long list of essentially conflicting or non-quantifiable social objectives will end in tears for everybody.

When a business has multiple objectives, some are inevitably conflicting, and the likelihood is much greater that they will fail at least some and probably ALL those objectives. The problem with the so-called social licence is it becomes a vehicle for some minority in society to impose their views on others through legalistic artifices, drifting further and further into a rules-based framework. Business and economic progress gets highjacked by politicised leaders who impose their ideology by rules.

A listed entity must balance customer service, efficiency and sustained long-term shareholder value. How they achieve it should blend in social and community aspects, but essentially it is about giving customers better products and services supported by good people, technology and capital. Governments can take post facto (i.e. from the owners of the company), a share of the economic surplus generated to support those in need, public safety, border security etc.

I started out in life believing in socialist-type ideals. I am ending life after observing closely many countries’ political systems. The best outcomes require the rule of law, freedom of expression and freedom of markets in which the forces of creative and destructive capitalism are allowed to play out. This must occur within level playing fields laid out by government, a strong central tax system to protect the weakest in society and strong institutions to defend against economic and political power becoming too concentrated. These are great achievements for a society and must be fought for.


Garry Mackrell worked at CBA from 1973 to 2010, including 13 years on the Executive Committee and head of various departments. He was Graham Hand’s boss for two years in Investment & Economic Research Department. This is his personal reflection after a long career at the top of Australian banking.

December 16, 2018

This is a terrific outline of recent CBA history, thank you Garry. As one who was responsible for some of the decisions covered here, I agree with the sentiment that having a complete team parachuted into the top ranks was a recipe for trouble. Sadly this is a common practice in large public companies where new CEOs surround themselves with colleagues who are endebted to the CEO. Also I believe that the expansion into wealth management was the correct one. The failures resulted from a lack of experience at the Executive Committee level and reluctance to appoint experts from wealth management at the senior levels. Also the “commission” driven culture was allowed deep into the reward systems across the bank. Colonial’s wealth management business was based on external distribution and allowing it to directly access the CBA customer base was a recipe for disaster. CBA had a very successful wealth management business prior to buying Colonial, which was not commission-based, and it should have been retailed separate to Colonial.

All up there are many lessons here, and the deep expertise and experience of people like Garry is far more valuable than the “Management Consultant” background so favoured by modern Boards.

December 06, 2018

I had the great pleasure of working with Garry for a number of years including as a colleague on the CBA executive committee. I worked under David Murray, Ralph Norris and Ian Narev. All are people of great intellect, ethics and good will, and each has a distinctly different leadership and decision-making style.
Garry has written here an excellent and balanced piece from the perspective of a very successful and experienced banker and former CBA insider. It is clear that failings did occur as the Royal Commission has amply demonstrated. The challenge for regulators and society more generally is not to infer malevolence on the part of management, but rather failure in various points of the value chain. As Garry points out, the fragmentation of end-to-end accountability in lines of business can to a significant degree be directly pin-pointed to the centralisation of power in the Risk and Finance functions, (which in turn was mandated by APRA).
I am not blaming APRA for the bank's failings, but as business lines have progressively lost the ability to make (risk) decisions, real accountability at the front line inevitably diminishes, despite best theoretical intentions.

December 06, 2018


It's ok to charge dead customers for ages. Got it.
Social license a vehicle for minorities. Got it. Even though the banks have taxpayer backing (i.e. TBTF).

Defense of the indefensible.

December 05, 2018

I remember the first thing I was told when I joined CBA in 1967 was "there is no degree of honesty". And there isn't. An excellent read.

December 03, 2018

In more recent times I have endeavoured to avoid some form of ‘holier than thou’ dissection of the performance of my career employer (and other banks) but of course that is difficult as so many friends, family and ex-colleagues ask ‘how has this been able to happen’.

The Royal Commission is of course attempting to answer that rhetorical question and I see little value regurgitating what is now in the public domain. I will also resist the temptation to comment on the drivers of remuneration!

However for me a couple of key factors, common to most of the issues identified are

Ø a seemingly deliberate tactic of discarding career bankers with experience and specialist knowledge and replacing them with no doubt better academically qualified younger people who subsequently demonstrated the risks associated with a loss of corporate memory and specialist knowledge (and in many circumstances also seemed to evidence a lack of respect for those with a knowledge of how banking actually works; what is important even if tedious or laborious and also the benefits of ‘checks and balances’ and substantive oversight)

Ø a failure to understand that while distribution and channels are vital, banking is about much more than that! The evident failure to ensure that there were Executives and Board members who ‘got’ the entirety and inter connectedness of the industry was in my mind a significant contributor to the matters now brought to light

December 03, 2018

"If the lawyers’ picnic results in legislated fire walls and caveat seller not buyer, the limited market that is Australia will revert back to small, undercapitalised risk-averse players." Indeed! Woe betide us...

Scott Tanner
December 02, 2018

A characteristically well reasoned, broad ranging and concise reflection from Garry Mackrell. Worth a read.

December 02, 2018

I loved the line... "The problem with the so-called social licence is it becomes a vehicle for some minority in society to impose their views on others through legalistic artifices"

Over time this will become the epitaph of the Royal Commission. It became quite clear in the final rounds of the RC that Orr and Hodge are pushing ideological solutions fed to them by minority lobby groups. Their "potential solutions" for mortgage broking and financial advice ongoing service fees in particular, were underpinned by factual errors and ignore the practicalities of real world consumer behaviour. Classic minority lobby group stuff.

Yet because of the theatrical nature of the RC and the associated media circus, these impractical minority positions are likely to be rushed into law. Most consumers will ultimately be worse off as a result.

December 01, 2018

There's no doubt the absence of people who worked their way up from the front line to the upper /top team has had deleterious impacts on the banks. Some mates in other industries have told me their companies retain policies that (most?) new potential high flyers have to spend time at the coal face understanding what happens and why and what can go wrong.

John Matthews
December 01, 2018

I applaud Garry Mackrell's timely and insightful commentary on the "Banking Inquisition", and the CBA in particular, and his courage in putting himself in the firing line.

If it follows the pattern to date, the final report of the RC will most likely paint all bank executives as robber barons and all incentives schemes as evil. Neither is true.

I might be accused of looking backwards through rose coloured glasses, but past and current experience tells me that CBA staff at all levels are honest people doing the best job they can for their customers and the business. Are there exceptions ? Of course there are, and they need to be fairly investigated and removed.

If properly designed and carefully managed, incentive schemes are legitimate and valuable components of remuneration. If the design and management is flawed, it can and should be fixed. The same goes for those flawed operational processes that have caused many of the issues identified by the RC.

Well done Garry on a broad and objective perspective

November 30, 2018

My first job from school was at CBA in rural NSW. The training structure and knowledge progression was wonderful. Good role models. The last ten or fifteen years I have been appalled by the constant staff turn over, lack of knowledge and responsibility in local branches. No body knows the regular customers, and certainly not by name. The fish rots from the head down.

Jonathan Hoyle
November 30, 2018

A fascinating article, Garry. Many thanks for sharing your insights. I do agree with you that it is so hard to build a solid culture when most of the top execs have been parachuted in from other businesses and share so little of a firm's history.

November 30, 2018

An excellent article. I lost interest in the BRC when Comyns started working in co-operation with the Senior Counsel against the mortgage brokers. This is disgraceful.

And in relation to on-going fees being removed (separate from grandfathered commissions), you could mount a high court case against that. This is because if you ban on-going support fees, you need to ban monthly payments for Netflix, Telstra, NBN, Ambulance cover, RAC as well. You should also ban ongoing fund manager investment fees as well. Its nuts. If you want everyone down at Centrelink, bring it on.

The real issue is how the BRC is being manipulated to reduce competition in the marketplace, which in the end game will see prices increase for consumers, not decrease. Read the recently released book "The Myth of Capitalism" for loads of current day examples.

At the moment, admin fees are coming down, so that is a big plus. But attacking brokers & advisers, driving them out of the business altogether, only favours the large Industry Funds, which will then bump their fees up when they eliminate their competition. Do the flat fees on $1.6 million in an Industry Growth Fund. Its gob-smackingly high.

Garry Mackrell
November 30, 2018

A few observations re insightful feedback-
My wording re “culture” was clumsy. What I should have said is my concern is with the generalisaion that issues arising are the result of the “toxic” culture of an organisation, whatever that means.
All organisations build on common understandings of “this is how we do things around here” and “this is what we believe in and value”.
My concern is that the loss of career executives has meant that these common understandings have been lost.
The sales and service regime insights are well made.
The approach worked well at ASB ( where service leads to sales understandings were well imbedded)but the much greater diversity and spans of business at CBA, linked with , in retrospect,the emphasis on short-term financial performance and relative weighting in the short-term incentive structures,led to a range of behaviours.
When businesses are merged, there are many unknowns.
Decisions on which IT system should prevail in mergers are always vexed- the proponents of both sides always argue their case eloquently. The technical complexities are massive and very few , if any, business executive,would be able to weigh the strengths and weaknesses of each bank’s systems quickly and objectively. The State Bank of Victoria merger was drawn out as attempts were made to minimise frictions- the result was a significant loss of customer market share as merger dragged on.
The merger of the Colonial Group was much quicker- the CBA IT systems were less customer centric but could handle the extra scale and more diverse banking activities.The result was poorer service for State Bank customers for a period but minimal loss of overall customer share.
Amusingly, CBA executives were initially regarded by the Colonial team as the Grey Cardigan brigade but over time the merger vastly deepened the skill base of the expanded Group.

Warren Bird
November 30, 2018

The final comment is amusing. In the funds business it was the 'brown cardigan' brigade. Though when we eventually merged CFS and CIM in 2003 (why did that decision take so long, Garry?) it went pretty well. Especially the bringing together of the fixed income and credit teams, which created a sum greater than the components that were combined (in my 'umble opinion) and set us up for some terrific years of performance and growth. (The decision to integrate advice and funds was taken later. That was a poor decision.)

And once we got know our CIM counterparts we realised that no one could call Tony Togher a brown cardigan wearer!

Diane and Max Lock
November 29, 2018

No one surprised by CBA greed, politicians have known for years, ASIC have known for years, we had been sending letters, emails for years, but the politicians, regulators, all protecting their banking mates.
Try and get your reputation back, and pay back everyone, and stop all your bad behaviour.

Rob Garnsworthy
November 29, 2018

Sorry Gary, I will buy some of that but not all and I was there. "The insurance business was a mess..." Well it wasn't, you guys simply did not understand it and did not bother to find out. I ran the Colonial International business which you personally took over when I quit - roughly 20% of the "value". As far as I am concerned, with the business I was running, CBA had not the slightest idea what they were acquiring.


Peter Ewers
November 29, 2018

Gary. As someone that spent 22 years at CBA, much of the time while you were there, I enjoyed your insights. Like you I agree that the early years when David Murray took the Bank from Government to public ownership was a successful transition mainly because of his management style, but also because his career path meant he understood risk and had an executive team that had a great breath of general management experience in most areas of the bank.

I can’t agree with you that culture is ‘mainly rubbish’. As you know I spent most of my latter years in Risk management and my view two things changed in CBA and across Banking that drove some of the poor outcomes that we have seen from the royal Commission. Firstly, was the adoption of a ‘sales culture’ where hitting targets at any cost caused lower and middle managers to drive the wrong behaviours at the front line. Secondly, this was compounded by the bonus and incentives that were put in place that rewarded poor behaviours, rather than customer outcomes.

I totally agree that you need to reward the best people in line with the market, but I can’t accept that the CBA CFO, Head of Risk and CEO can argue that Executives should be paid all of their short term incentive bonuses when there were so many fundamental Risk gate openers missed. This can only have einforced a culture where bad behaviours and mistakes that can damage the banks reputation don’t matter.

Like you I just don’t understand how the $20,000 cash automatic teller deposit AML mess could happen. Again a culture where branch people were calling out the problem only to be ignored by middle management and the fact that controlled self assessment for this operational risk just missed such a gaping hole.

Like you I hope that the Royal Commission does not overreact with regulating social licence that weakens our strong banking sector, but getting a better balance between customer service to drive shareholder value, rather than irresponsible sales and profit at any cost will take some time to rebalance.

November 30, 2018

The sobering part of the AML teller deposit debacle, was that the person overseeing it was promoted to CEO.

November 29, 2018

I have little knowledge of the business world. But the business world is only one aspect that contributes to society. I feel Garry's last paragraph is very insightful and powerful. Turbo charged capitalism is dangerous. I feel there is no place for totally free markets. Intelligently managed markets would be my preferred way of expressing it.Socialist type philosophy and Capitalism don't have to be either/or. Absolute equality is an illusion.Somehow we need to keep trying to live in the middle ground and that requires competent umpires that don't let things become too unequal and that requires intelligent governance and healthy, strong and flexible institutions.

November 29, 2018

Two words that no longer apply to banks; professionalism and integrity.

They have none. Not a skerrick.

I took all my personal and business banking away from the CBA due to the arrogant, ego-centric bell-ends who run this joke of a company. Without the top five floors of any bank, the place would run more efficiently, customers would be happier and you'd save more than a few quid.

And anyone who says they can forgive charging dead people should just get in the bin.

Graham Hand
November 29, 2018

Hi IAnA, on 'charging dead people' (and I'm not forgiving all behaviour here), I know that legal advice was obtained that there is so much work for financial advisers in dealing with an estate, and often financial advisers are not informed of the death for a while, that it was fine to charge for three months after death. Do you think that lawyers charge for administering a will and the estate after the death of a client ... of course they do.

November 30, 2018

Hi Graham, this is correct but I think this whole area needs review. I know of plenty of lawyers who ádminister'estates for much longer than necessary, I'm talking years as its a milking cow for fees. So, having to stop, reengage with the Executors to me is the correct way. Lawyers often make themselves executors, just saying.

November 29, 2018

Hi Graham

As somebody who worked there for over 30 years, I can tell you the rot started to set in at the commencement of the so called sales / distribution era – I saw careers trashed, some terrible hires, talk about fiefdoms, and the emergence of blatant greed re remuneration and bonuses, along with a sprinkling of questionable behaviour in the markets. It’s a long time ago so no point dredging it up.

I remember Matt Comyn commencing as an entry level hire at CommSec. He seemed like a good young type, and twenty odd years later he is the CEO. Whilst it’s a whole new world to what people like you and I experienced, I just wonder whether working for just the one organisation for 20 + years really provides enough experience factor.

Also I would question selling off the farm as CBA is doing in a way because of a few issues – accepting there are bad apples in every barrel. What it indicates to me is that management at the time was not capable of addressing /managing the problems, and the new management does not believe it is capable of fixing them – so solve the problem by selling the businesses off. Within all of this there were some very good people involved, some very good products and services - the businesses grew and shareholder value created, the point seems to be lost in that it was not all bad news.

The other aspect that stands out within the various hearings, was the really insipid performance of many of executives put up in front of the hearings – it appeared they were scared to say anything, and indeed had very little grasp of the subjects they were relating to.

One of my great mentors at the CBA, and probably yours also was Campbell Ker, on many occasions he would say to me, “think what you say and say what you think” – “also if it looks like one and smells like on, chance are it is one”.

The wisdom of that mentality seems to have been lost - enjoy the publication, will be interesting to see what unfolds.

Sandra Wills
November 29, 2018

Thank you Garry - the most informed, wise, contextual and insightful article I've read on the RC and the bigger themes at play.

Judith White
November 29, 2018

An excellent article Garry, thank you!

Been there B4
November 29, 2018

Most interesting piece of writing.

I meet with a retired banker who had career in branches and main offices and he tirelessly regales us of the old times.

I think the down-grading of the branch manager ( with longevity and knowledge of his/her local community and clients) to be replaced by call-centre people is core to decline in real customer service, and the issues raised in the R Commission. This is not specific to banks; everyone has a horror story about call centres.

November 29, 2018

Very interesting perspective. The difficulty I'm having in all of this is Gary's statement 'the lens we look back through changes through time'. Well I agree it does but that statement also leads to the other perspective, that is to what degree do former executives paint these sorts of perspectives in part because it is their legacies we are talking about. Human psychology tells you there is always a motivation to write, rewrite or frame history to preserve one self. And I find it difficult to weigh up or trust these perspectives in that light. But the lens can not justify some of the issues that the RC have raised and I think that is the sobering part.

November 29, 2018

At last an objective and sensible view. Sadly it will not be widely distributed as it serves no political purpose nor does it serve the purpose of the common media. The FSRC will change the landscape but not for the better. We are likely to lament the outcome for years to come.

SMSF Trustee
November 29, 2018

I make this comment as a former customer of the State Bank of NSW.

Yes, the State Bank part of the acquisition paid for the deal so was great for CBA shareholders. It did this by absorbing a lot of customers at zero marginal cost.

It took a lot of brains to do that, didn't it?

But this was terrible for us customers. The State Bank had developed advanced systems that enabled, for example, paperless deposits. When the CBA took over we had to go back to filling out those stupid pink slips again!

It was years before the CBA finally caught up with what the State Bank had been delivering. Why they didn't take on the State Bank's systems is beyond me. That would have delivered a benefit to their existing customers as well!

But customer service has never been a strong point of the CBA. They arrogantly assumed that State Bank people would be grateful to have to go back to the dark ages of banking.

I can tell you this one wasn't!

Garry's comments about the devastating impact of the RC's conclusions are spot on. But that only reinforces the tragedy of how the CBA mishandled the Colonial acquisition doesn't it? Yes, all those culture differences should be "soluble". But it's not as though the CBA wasn't told about the differences and the need for them to be managed at the time it bought the fund manager. I'm aware of conversations with Colonial's leaders on that very topic!

Their failure to manage those differences goes along with their failure to look after State Bank customers properly as evidence of the extreme arrogance of the CBA's leadership in the early 2000's.

So I'd be careful just blaming the leadership that came later.

Peter E
November 30, 2018

As one of the team that had the “joy” of integrating Colonial Bank’s business clients, I can say that they were generally over-serviced, with weak credit profiles and low profitability. Little wonder that they didn’t stay around! The only reason they were taken was Colonial’s refusal to break it up. Why would that be? The jewel that was pursued was the funds management piece and the bank was part of the price to be paid. It survived only because Colonial took half of the CBA’s profits from its NSW operations for decades. If they had to stand on their own feet, they would have gone the same way as State Bank of Victoria.

Garry is spot on with his comments re the hiring of external execs that frankly knew nothing of the bank nor cared. Their only care was their bonus & the next step on the pathway to greatness. I have observed the same behaviour at the other banks and foreign banks as well so I don’t think CBA has this on its own. There are way too many management consultants in the upper echelons of all the major banks who have largely presided over the decline in behavioural standards.

The regulators in Australia do need to significantly upgrade their input. I also know that APRA’s reviews are far too collaborative to be truly useful.

SMSF Trustee
November 30, 2018

Paperless deposits = being overserviced. Spare me days!

November 29, 2018

Thanks, such contextual reflection is priceless. Michael Lewis-like tombs will be written, and the hysteria rewritten, on the Hayne pain again and again.

November 28, 2018

A seminal contribution on CBA. A much needed perspective, and Garry's ex - leadership status makes it topically worthwhile. I crossed paths professionally with Garry and he earned considerable respect for his professionalism and integrity.


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