Disclosures Defended by CBA

Commonwealth Bank (CBA), the largest bank in Australia, defends its highly ranked executives in breach of disclosure rules during the issue of $2 billion capital raising. CBA disagreed by saying that, rules were not broken when it warned a small group of shareholders regarding the bad debt raise before a public announcement. The bank said that the information was not materially significant so there was no need to warn the public earlier.

The senior treasury and financial officials of Commonwealth bank are under intanse pressure on the issue. CBA is planning to have meeting with its share holders on New Year to avoid damage to its reputation. There is a speculation that CBA’s board would review this matter but no board meeting was planned this week.

CBA’s Chief executive, Ralph Norris and chief financial officer, David Craig, has the “full support” of the board, said its chairman John Schubert. Due to the criticisms Craig declined to comment on the matter when tried to contact. It is said that the Australian Securities Exchange has referred the Australian Securities and Investments Commission about the matter for further investigation.

The executives of the rival banks have said that, CBA should have informed the market when it was sure that bad debt charges had exceeded internal forecasts. A senior financial executive of a rival bank said, "Good governance says whenever you are aware of a material impact on your profit then you should come out straight away", "Something like this has a huge impact on reputation".

CBA has revealed that, it is aware of the increase in bad debt charges than expected for more than a month. On November 13th it said the investors, it expects the bad debts to run between 0.4 and 0.5%, but three days later, management said, bad debts would run at 0.6%, this was revealed to investors last week.