MELBOURNE, Australia--Commonwealth Bank of Australia Ltd. (CBA.AU), hit by allegations years of compliance breaches allowed its banking machines to be used for money laundering by drug dealers and other criminals, said its chief executive will step down by mid-2018.
Ian Narev, who has been CEO and managing director since December 2011, will resign by the end of the financial year on June 30, Chairman Catherine Livingstone said in a brief statement Monday.
Continue Reading Below
The exact timing of Mr. Narev's departure will depend on the outcome of an ongoing comprehensive internal and external search process, she said.
Word on the succession process was disclosed to ensure the market is fully informed and to provide certainty for the business, Ms. Livingstone said.
Pressure has mounted on Australia's largest bank in recent days after the government's financial-intelligence agency launched a civil suit in the federal court and the securities regulator followed up last Friday with word it had begun its own investigation.
Earlier this month, the Australian Transaction Reports and Analysis Centre, or Austrac, filed a lawsuit against Commonwealth Bank, alleging tens of thousands of compliance failures that opened the bank up to money laundering. Each breach carries a maximum penalty of 18 million Australian dollars (US$14.2 million).
The allegations relate to the use of the bank's "intelligent deposit machines," a type of ATM that allows anonymous deposits of up to A$20,000 in cash at a time to be automatically credited to accounts. Austrac's allegations largely relate to a failure to provide timely reports on transactions above a A$10,000 threshold over about three years from 2012, as well as accusations it failed to report suspicious transactions on time or at all and that even after it became aware of suspected money laundering of not monitoring customers.
The allegations add to a cloud over the banking industry as regulator and political oversight has increased following scandals over financial advice.
Ms. Livingstone said that, in discussion with Mr. Narev, it had been agreed it was important for the bank to deal with speculation and questions about his tenure.
"Today's statement provides that clarity and will ensure he can continue to focus, as CEO, on successfully managing the business," she said.
In the wake of the suit, Commonwealth Bank's board axed short-term bonuses for Mr. Narev and other senior executives for the just-ended year through June. Ms. Livingstone acknowledged the reputation of the bank and the industry was affected, and said a committee had been set up to deal with the bank's handling of the allegations. However, she said there was no reason to believe the allegations stemmed from deliberate or unethical behavior or from any profit motive.
Write to Robb M. Stewart at email@example.com
(END) Dow Jones Newswires
August 13, 2017 19:26 ET (23:26 GMT)