Slapping CBA with a $1 billion capital penalty, APRA lambasted a “widespread sense of complacency”, overconfidence, excessive complexity and insularity. It said CBA had not learned from experiences and mistakes, and “turned a tin ear to external voices and community expectations about fair treatment”.
Devastatingly, it chastised CBA for a “slow, legalistic and reactive, at times dismissive, culture”, and declared “an overly collegial and collaborative working environment [had] lessened the opportunity for constructive criticism, timely decision-making and a focus on outcomes”.
If that was not a call to action for Livingstone, then nothing would be.
‘Much better organisation’
She took one of the biggest risks of her career by appointing Matt Comyn as CEO in late January 2018, given Comyn had led the retail bank where the money laundering problems had emerged.
But just two years later, after plenty of blood, sweat and tears had been spilled, CBA had fundamentally changed for the better as a result of Livingstone’s determination to fix the place.
As Promontory, which reviewed the response to APRA, reported in 2020: “Accountabilities have been sharpened. The ‘voices’ of risk and compliance have been elevated, and are being heard. There has been considerable improvement in the ownership and understanding of non-financial risk.”
Looking over to the Opera House and Sydney Harbor Bridge on Wednesday night, Comyn described Livingstone’s chairmanship as “coinciding with a very challenging time for our organization and the broader industry”.
But “under her leadership, we became a simpler, better bank with an unwavering focus on our customers, our shareholders and our people, and, as a result, we are a much better organisation”, he said.
Incoming CBA chairman Paul O’Malley also spoke at the soirée, describing Livingstone as not only a leader of the banking sector but corporate Australia more broadly, acknowledging her time as chair of Telstra, which she navigated through challenges including the construction of the national broadband network.
Livingstone, who took home $900,000 this year for her efforts, wrote in the annual report released on Wednesday that she had served as chairman at “a time when the bank has addressed a number of complex challenges and subsequently rebuilt its reputation”.
Earlier in her last day on the job, she had done the rounds with senior executives and staff at the bank’s Darling Harbor office, including participating in an interview with Comyn in front of staff.
As well as the response to APRA and AUSTRAC, she told them another crowning achievement was overseeing CBA’s firm financial footing to allow it to support customers through the pandemic.
“I don’t think we would have been able to serve our customers at the rate that we did had it not been for the work done on the underlying systems and processes,” she said.
She also presided over strategic moves, including reducing complexity through a series of asset sales, including selling insurance and wealth management operations. These deals culminated this week when CBA announced it had sold a 10 per cent shareholding in the Bank of Hangzhou in China. Meanwhile, she insisted CBA keep investing to ensure it can fight the forces of digitization.
Those who have watched Livingstone grow as a director suggest other leaders of corporate Australia study her qualities.
Angus ArmorCEO of the Australian Institute of Company Directors, says he first encountered Livingstone in a boardroom in the 1990s, where his leadership qualities were immediately evident.
“She’s incredibly smart and experienced, but always curious and learning,” Armor said on Thursday. “She’s persistent in chasing outcomes and passionate about getting there. Catherine is resilient with a very strong set of values, and she cares deeply about the future of Australia. In the boardroom, she intently listens to different views so when she starts to ask questions, it focuses your mind.”
But she shunned the public spotlight. She has declined multiple requests for an exit interview. Her performance by Ella at the Hayne royal commission came under scrutiny when she failed to recall dates or context during her first day of giving evidence, only to return the next day with greater clarity. At rare public appearances at CBA annual general meetings, she was typically steely and defensive, fending off attacks from environmental activists.
‘Strong strategic franchise’
But her scientific background helped her understand the environmental, social and governance forces before other banks. She struck a deal with Market Forces in 2019 to cut lending to the coal sector and, last year, CBA was the first major bank to issue “glide paths” to show planned reductions in lending to emissions-intensive industries. On Wednesday, it was the first bank to issue a dedicated “climate report”.
“Today, CBA is a better bank with a more accountable culture, anchored in strong values and a renewed purpose,” she wrote in this week’s annual report. “The bank has a clear strategy for the future that places the organization in good stead to face the challenges and opportunities ahead.”
This has won the respect of other major bank chairmen.
John McFarlane, chairman of Westpac, says leadership is primarily about results and, during her tenure, CBA “has become one of the largest banks in the world by value, is trading at a significant premium to equivalent competitors and producing higher returns”.
“It has a strong strategic franchise, has exited non-core businesses, has retained its leading position with customers and has largely put the issues from the royal commission behind it. That says it all,” McFarlane said in late April.
They are big shoes to fill for Paul O’Malley, the former Bluescope Steel CEO who has been a director of CBA since early 2019 and assumed the chair on Thursday. He will hold his first board meeting next month.
As Promontory has said, CBA’s governance journey is far from over and its “greatest overall challenge” will be ensuring the changes that respond to APRA, AUSTRAC and Hayne are sustained.