CBA finance chief Rob Jesudason’s exit makes Matt Comyn’s job harder

The Australian 12:00am May 15, 2018

Richard Gluyas

The revolution under way at Commonwealth Bank has many dimensions, not in the least the sixth vacancy in the executive leadership team created by yesterday’s announcement that chief financial officer Rob Jesudason will return to Hong Kong to join a blockchain company.

Suffice to say that new chief executive Matt Comyn is not happy with the way events have panned out. He believes he secured a verbal commitment from the CFO that he would stay in his post for a reasonable period after the CEO changeover from Ian Narev, perhaps towards the end of the calendar year.

Jesudason, who was briefly an internal candidate to succeed Narev, is understood to have informed Comyn on Friday of his plan to join the blockchain company Block.one.

Any prospect of working out a notice period was lost at that point, with Jesudason expected to take gardening leave as he prepares to relocate his family.

There are now six vacant roles on the CBA executive leadership team: chief financial officer, head of the retail bank, head of the institutional bank, chief information officer, head of wealth, and head of people and culture.

The ratio of vacancies to positions currently filled in the 12-person team is 50:50.

Comyn faces a difficult task in pulling together a high-calibre team that’s capable of resolving CBA’s myriad challenges.

While the bank was making good progress with the renewal of its executive team, and an update on appointments is expected “in the coming weeks”, the move by Jesudason compounds the difficulties because it’s only six weeks or so until CBA rules off its June financial year accounts.

The CBA results machine would have only just started to crank up, but the executive in charge of the whole process has now gone.

Comyn’s perfunctory reference to Jesudason in yesterday’s announcement, at the same time as he showered praise on acting CFO Alan Docherty, was a dead giveaway that there was an underlying and untold narrative.

Also, the announcement of ­Jesudason’s immediate departure failed to chime with Block.one’s version that its prized recruit would join later this year “following his notice period”.

Perhaps the final indignity was the unseemly haste with which Jesudason’s name was removed from CBA’s rapidly eroding list of group executives. It’s rare to see such commitment to updating a company’s website.

Jesudason was the Hong Kong-based chief of CBA’s international financial services unit from late 2014 until his appointment as CFO in July last year.

He returns as Block.one president and chief operating officer — publisher of the EOSIO blockchain software and seller of the EOS token, a top-five cryptocurrency based on its $US12.4 billion ($16.4bn) market value. As chief operating officer, he will be responsible for scaling the group’s global operations.

One of the big questions is whether Jesudason’s resignation will lead to an exodus of highly qualified finance professionals.

One senior industry observer warned yesterday that the punishing BEAR (banking executive accountability regime) framework and continuing scrutiny from the royal commission could result in a stream of departures to less hostile banking environments.

“Why would you want to work in Australia when you’ve got BEAR, the royal commission, (the likelihood of) no bonuses at CBA, and the end of the housing cycle?” he said.

A further aspect of the CBA revolution is board renewal, with the directors now working harder, as well. Since the beginning of the year, monthly board meetings have sometimes turned into three-day affairs — a day longer than before. A bank spokesman said it was more a reflection of the current workload than any permanent change.

Among other things, this includes acceptance of the APRA report on culture and risk and implementation of its 35 recommendations, the financial services royal commission, Austrac’s money laundering allegations, and last week’s settlement with ASIC over attempted unconscionable conduct in relation to interest rate rigging.

Permanent or not, the APRA report fired a rocket at the directors over their complacency and a “dulling of the senses” that blinded them to a deterioration in the bank’s risk profile. There was a complacency that ran through the bank, from the top down.

The bank’s first ranking on many financial measures created a collective belief that CBA was well run and inherently conservative on risk, which fuelled overconfidence and a lack of appreciation for financial risks. The panel also found that the board deferred to chief executive Ian Narev for internal and external communications to ensure there was a single, consistent voice.

The result was that the board didn’t have a highly visible presence, and the lack of apparent urgency in dealing with non-financial risks could have resulted in a “tone of inaction” where sound risk management principles were given insufficient priority. These findings related to the operation of the board before last year’s appointment of new chair Catherine Livingstone.

Under Livingstone, according to the panel, agendas had been enlivened, the level of urgency had lifted, and there was an environment of greater challenge and engagement with the executive team.

Board members talked of a “don’t tell me, show me” philosophy to ensure that the trust placed in executive teams was justified. “The board agenda has been recast to ensure a more robust and effective discussion of relevant topics, including the most pressing risk matters,” the panel found.

“Standard business updates have been abridged, and the time saved has typically been utilised by ‘deep dives’ into areas of interest, with a recent focus on risk topics.”