The Commonwealth Bank faces a necessarily long and complex process in addressing the issues raised by the Australian Prudential Regulation Authority (APRA) inquiry into the big banking group, according to the first report of the independent firm overseeing the process.
The report, generated by IBM subsidiary, Promontory Australasia, warned however that the sheer size of the bank and the extent of embedded processes and sub-culture were likely to post ongoing execution challenges.
The report, released by the Australian Securities Exchange (ASX), has delivered the Commonwealth Bank a broadly positive assessment, noting that the bank’s design and management of the process “evidences a commitment to meeting the challenges described in the Inquiry Report in a timely and comprehensive way”.
“Furthermore, the foundation of a successful risk remediation program is being laid,” the report said.
It said that CBA appeared to be responding in a timely way but that the key risks identified to date related to the need to ensure access to skilled personnel to support the program, particularly in the human resource and risk management areas.
“While initial resourcing plans and a Program budget for the current financial year have been established, we would expect to see evidence of more comprehensive resource planning and committed multi-year budgets going forward,” the report said.
“Moving forward, the sheer size of CBA, the extent to which existing processes and sub-culture are embedded and the complexity of the Program are likely to pose ongoing execution challenges,” it said.
“The Board and management should, therefore, work to ensure Program momentum is maintained through engagement, communication of its commitment to the Program and monitoring of the Program as it is executed,” the report said.