Treasurer Scott Morrison said he expected more executives at the Commonwealth Bank to resign or be fired in the wake of a damning report by the financial services regulator APRA, which the bank itself has described as "confronting" reading.
The Australian Prudential Regulation Authority inquiry, which followed an embarrassing money laundering scandal, has uncovered a culture of complacency and a board that failed to provide adequate oversight.
"It found there was a complacent culture, dismissive of regulators, an ineffective board that lacked zeal and failed to provide oversight," Mr Morrison said in Canberra on Tuesday.
The treasurer also pointed to "a lack of accountability and ownership of key risks by senior executives, a remuneration framework that had no bite".
"While CBA is a sound financial institution ... that rap sheet that I've just read out from APRA is very damning," he said.
"The report, I think, is required reading not only for every financial institution in this country but, frankly, it should be the next item on the agenda of every single board meeting in this country regardless of whether you're a bank or not.
"It goes to the heart of what responsibilities of board directors are."
Asked what the CBA board should do, Mr Morrison said a number of board members and executives had already gone.
"My understanding is there will be others who will be leaving and that's what I expect to happen," he said.
According to APRA, "CBA's continued financial success dulled the senses of the institution", particularly in relation to the management of non-financial risks.
Bank accepts all recommendations, apologises to customers
CEO Matt Comyn apologised to the bank's customers and shareholders, saying the APRA report and the ongoing banking Royal Commission had exposed "significant shortcomings in governance, culture and accountability".
Mr Comyn said he would not take a short-term bonus in 2018.
CBA has also accepted every one of the APRA report's recommendations and signed on to an enforceable remedial action plan, agreeing to carry an additional $1 billion in regulatory capital on its balance sheet.
"There are tens of thousands of people around the country who come to work every day and do a great job serving their customers. This report is not about them. This is a report about the failures of senior leadership inside the Commonwealth Bank, including me," Mr Comyn said.
APRA chairman Wayne Byres said CBA's governance, culture and accountability practices needed considerable improvement.
"CBA has itself identified and begun taking steps to address many of these issues," he said.
"But there is much to do and a risk that the same issues, which have led to the need for the inquiry, undermine the bank's efforts to comprehensively and effectively respond to the recommendations."
Asked what people should make of the big banks, which enjoyed the protection of taxpayers during the global financial crisis via a government guarantee, Mr Morrison said Australians should be as disappointed as he is.
But he stressed the government was taking action, citing the "permanent" bank levy included in last year's budget.
The levy is expected to raise $16 billion by the time the government's planned corporate tax cuts have through the economy.
- with AAP
