Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


CBA shares recover from heavy losses

Simone Ziaziaris  |  07 Aug 2017Text size  Decrease  Increase  |  

Page 1 of 1

SYDNEY - [AAP] Shares in the Commonwealth Bank of Australia (ASX: CBA) have bounced back in early trade, recovering some of heavy losses suffered on Friday after the bank was accused of more than 53,000 breaches of laws put in place to combat money laundering and terrorism financing.

CBA boss Ian Narev on Monday warned people against jumping to conclusions after the federal government's financial intelligence unit AUSTRAC last week launched civil proceedings in the Federal Court.

It has accused the bank of systemic failure to comply with anti-money laundering and counter-terrorism financing laws.

"I understand there is very little goodwill for banks in general, and for CBA in particular, so when something like this happens people jump to conclusions," Mr Narev told The Australian.

CBA's shares closed 3.9 per cent lower on Friday, dragging its market value down $5.5 billion to around $139.6 billion.

But at 1101 AEST on Monday, the lender's shares had regained some ground, trading 1.09 per cent higher at $81.60.

CMC Markets chief strategist Michael McCarthy said investors were forming a more balanced view now that CBA had reviewed the events and said it will defend the allegations.

"We saw an initial knee-jerk reaction to the news but CBA has now released a statement and given the other side of the story," Mr McCarthy said on Monday.

"It appears the market overall is taking a more balanced view of the allegations that have been made--nothing has been proven at this stage.

"Having said that though they are underperforming (compared to) the rest of the banks so there is clearly some doubt lingering around this issue."

CBA could face a maximum penalty of $18 million for each of the 53,700 contraventions, if found guilty.

The lender said it was taking the allegations seriously and is reviewing the 580 pages of that statement of claim filed by AUSTRAC last week.

It admitted "mistakes can be made".

"In an organisation as large as Commonwealth Bank, mistakes can be made. We know that because we are a big organisation, these mistakes can have significant impact," CBA said in a statement on Monday.

It pointed to a coding error in its Intelligent Deposit Machines between 2012 and 2015, when it was discovered.

"The vast majority of the reporting failures alleged in the (AUSTRAC) statement of claim relate specifically to this coding error," it said, adding that a defence would be filed in due course.

"Ultimately, a court will seek to ensure that, overall, any civil penalties are just and appropriate."

A first case management meeting between AUSTRAC acting chief executive Paul Clark and CBA will be held on September 4.

CBA is due to release its full-year results on Wednesday and is expected to report another record profit.

The case is already making waves in Federal Parliament.

South Australian Senator Nick Xenophon on Sunday floated introducing legislation to apply criminal sanctions, including jail terms, to the executives of banks "who systemically fail to abide by the rules" on money laundering and terror financing.


AAP logo image

© [2017] Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.