The Australian lender has unveiled a new crop of executives and plans to demerge its wealth and mortgage broking arms as it attempts to fight back after scandal.

Commonwealth Bank of Australia is to split its wealth management and mortgage broking businesses, and launch a strategic review of its general insurance operation, including a potential sale. The changes come alongside a raft of top-level executive appointments.

The bank, which earlier this month agreed a record A$700 million ($520 million) civil penalty for failings over suspicious transactions, aims to build “a leading independent wealth management business” so it can focus on its “core banking businesses in Australia and New Zealand and create a simpler, better bank”. The demerged business, CFS Group, will include CBA’s Colonial First State, Colonial First State Global Asset Management (CFSGAM), Count Financial, Financial Wisdom and Aussie Home Loans businesses.

CBA, which is now led by chief executive Matt Comyn, who took over earlier this year in April after replacing Ian Narev, has reshuffled its leadership, naming six new executives. 

Besides the senior changes announced below, Comyn said that all the other leadership roles are unchanged. The bank is completing its hunt for a chief financial officer, considering candidates from within and outside the bank. A permanent hire is due when CBA issues its 12-month results on 8 August. In May this year, CBA said that Rob Jesudason had resigned as CFO. It named Alan Docherty, previously chief financial officer for institutional banking and markets, as Jesudason’s acting replacement at the time. 

The bank saw a raft of executives depart amid the scandal. Regulatory problems are part of a wider compliance failure across Australia’s banking and wealth management sector. Some problems came to light after the Australian government set up a Royal Commission late last year. (To see a roundup of latest developments, click here.) At the heart of the CBA affair are late filings of 53,506 Threshold Transaction Reports for cash deposits through Intelligent Deposit Machines (IDMs). The bank also inadequately followed risk assessment requirements on IDMs on 14 occasions. Transaction monitoring did not operate as intended on a number of accounts from October 2012 and October 2015. Some 149 Suspicious Matter Reports were filed late or were not filed as required. Due diligence tests on clients were broken in the case of 80 customers.

Shares in CBA were down 2.3 per cent at A$72.16 on Monday, having recovered from recent lows in June; shares have suffered a negative return of 11.9 per cent over one year.

New names
Nigel Williams has been named as chief risk officer, joining on 5 November this year. He has more than 30 years of experience in banking, including 15 years at ANZ as chief risk officer and previously head of institutional banking in Australia and in New Zealand. 

David Cohen has been appointed deputy CEO, moving from his prior chief risk officer role, and is also joining on 5 November 2018. In this new role, Cohen will be responsible for: strengthening group customer relations and customer advocate functions; leading the demerger of the Colonial First State Group, and the M&A team; and assisting Comyn with group-wide initiatives. Cohen has more than 20 years of banking and wealth management experience, previously serving as general counsel for CBA and prior to that at AMP.

Pascal Boillat has been made group executive of enterprise services and chief information officer, with responsibility for all technology and operations, and will join on 1 October 2018. He has more than 30 years of experience, most recently at Deutsche Bank where he was global group chief information officer. Prior to this, Boillat was head of operations and technology for Fannie Mae, and before that worked at Citi. 

Sian Lewis has been appointed group executive for human resources; Lewis takes up the role from 1 August 2018. She joined CBA in 2014. Prior to joining CBA, Sian spent nine years at Westpac working across retail and business banking, including acting as head of NSW retail network. 

Andrew Hinchliff has been named group executive for institutional banking and markets, taking effect from 1 August 2018. He joined CBA in 2015 as executive general manager for global markets after more than 15 years in global institutional banking and markets roles with Goldman Sachs, and earlier at Credit Suisse First Boston.

And finally, Angus Sullivan has been appointed group executive for retail banking services, taking effect from 1 July 2018. At present he is acting group executive for retail banking services and joined CBA in 2012.

Demerger
CBA said the demerger of CFS Group “will provide investors with a direct investment in a leading independent wealth management company made up of a diversified and complementary set of businesses”. Those firms are Colonial First State, superannuation, investment and retirement solutions platform; CFSGAM – a global investment management business, and CBA’s third-party distribution businesses.

“The wealth management and mortgage broking businesses are each high-quality franchises. With innovation and disruption in wealth management increasingly favouring specialist companies, they will benefit from independence and the capacity to focus on new growth options without the constraints of being part of a large banking group,” Comyn said. 

The chairman of CFS Group will be John Mulcahy. A search for the CEO of CFS Group is underway.

CBA shareholders will receive shares in CFS Group proportional to their existing CBA shareholding, while retaining their existing CBA shares. CBA does not intend to retain any shareholding in CFS Group following the demerger.