CBA cases brewing
Lawyers have outlined their class action case against CommBank.
CBA was hit with potentially Australia’s largest ever class action lawsuit over its money-laundering scandal that has already exposed it to billions of dollars in fines and landed a serious blow to its stock value.
Litigation fund IMF Bentham is paying for the lawsuit against Australia’s biggest bank, which it accuses of making false and misleading statements in its failure to disclose breaches of anti-money laundering rules for a number of years.
It opens up a new front for the $128 billion lender, after financial intelligence agency AUSTRAC opened separate legal action over alleged breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act.
In the first day of hearings for the AUSTRAC case this week, the bank said it would not dispute the regulator’s allegation that it processed tens of thousands of illicit transfers (worth $624.7 million) from 2012 to 2015.
In addition to the two civil suits, CBA is also being investigated by APRA over the same suspicious transfers cited in the AUSTRAC claim.
There are now fears that foreign regulators will pick up the case too, because some of the money in question made its way offshore.
Velocity Trade banking analyst Brett Le Mesurier has told reporters that investors are worried about the effect of the scandal on earnings growth, criticising the bank for “looking inwards rather than outwards as they deal with this”.
IMF will bankroll the class action on behalf of any CBA shareholders who bought stock between Aug. 17, 2015 and Aug. 3, 2017, seeking damages for premiums paid for shares while the bank kept information of its breaches hidden.
CBA announced a board shake-up this week, with three of its nine non-executive directors set to leave over the next 12 months, while Robert Whitfield, a former head of institutional banking at rival Westpac has been appointed as an independent non-executive director. He is rumoured to be on the shortlist of replacement CEOs too.
CBA chief Ian Narev will leave by mid-2018, ending a 7-year tenure marred by scandals and calls for a broad judicial inquiry into Australia’s banking system.