The move marks the first time the Australian Prudential Regulation Authority (APRA) will hold a public inquiry into a bank.

Commonwealth Bank of Australia, the country’s largest lender, has been jabbed with a public inquiry into its governance and culture - the second regulatory investigation to be launched this month against the bank. 

The watchdog’s move marks the first time the Australian Prudential Regulation Authority (APRA) will hold a public inquiry into a bank and mounts pressure on the government to spark a wide-reaching parliamentary probe into the country’s banking sector. 

"The overarching goal of the prudential inquiry is to identify any core organizational and cultural drivers at the heart of these issues," APRA chairman Wayne Byres said. CBA will cover the costs of the six-month probe, he added.

CBA was sued earlier this month by financial intelligence agency AUSTRAC, which alleged that criminals and terrorism financiers used the bank to wash millions of dollars of dirty cash. The suit was the first of its kind against a major Australian bank and leaves CBA open to a fine potentially in the region of billions of dollars. 

Since then, Australia’s securities watchdog has launched a separate probe; a class action law firm has announced plans to file a suit on behalf of shareholders; and the bank has said that chief executive Ian Narev will step down from the helm by next June. More generally, the proceedings have rattled the nation’s banking sector. 

CBA, which blamed a software coding error for its alleged failure to detect some 54,000 suspicious transactions, has lost roughly 10 per cent, or $9.9 billion, of its market value since the AUSTRAC investigation began on 3 August.