Commonwealth Bank of Australia (CBA) has agreed to implement all the recommendations made by Prudential Inquiry, which was made public by the Australian Prudential Regulation Authority (APRA).
CBA chairman Catherine Livingstone said: “Addressing the findings of the Report is a key focus for the Board and management to ensure that our governance, culture and accountability frameworks and practices are significantly improved and meet the high standards expected of us.”
CBA CEO Matt Comyn said: “We have embraced the report as a critical but fair assessment of the issues facing us and we will act on its recommendations, and the requirements of the Enforceable Undertaking, in an open, transparent and timely way.
“Our current change priorities are consistent with the Report’s recommendations. We now have a detailed roadmap for ongoing change and we will work with APRA to ensure we implement all of the Report’s 35 recommendations.
“We will make the necessary changes to become a better bank and we will be transparent about our progress. This includes establishing a much higher level of accountability and consequence for our actions and the impact we have on customers. This starts with me.”
APRA will apply a capital adjustment to CBA’s minimum capital requirement by adding A$1bn to the bank’s operational risk capital requirement.
The bank may apply for removal of all or part of the capital adjustment when it believes it can comply with APRA’s satisfaction.
The bank also agreed to set up an APRA-agreed remedial action plan within 60 days with clear and measurable responses to each of the report’s recommendations.
Additionally, CBA will appoint an independent reviewer approved by the APRA.
Starting 30 September 2018, the reviewer will report to APRA every three months on compliance with the EU and on those items in the remedial action plan that CBA considers are about to complete.