Commonwealth Bank

Commonwealth Bank of Australia

Type	Public (ASX:[1])
Industry	Banking Financial services Investment services
Founded	1911 as a government bank 1991 as a public company
Headquarters	Sydney, Australia
Area served	Australia New Zealand Indonesia Vietnam United Kingdom United States China Hong Kong Singapore India
Key people	David Turner, Chairman Sir Ralph Norris, CEO and Managing Director
Products	Finance and insurance Consumer Banking Corporate Banking Investment Banking Investment Management Global Wealth Management Private Equity Mortgages Credit Cards
Revenue	A$28.564 billion (2006)
Profit	A$4.723 billion (2009)[1]
Total assets	A$780.299 billion (2009)[1]
Employees	45,025 full-time equivalent (2010)[2]
Divisions	Retail Banking Services, Business and Private Banking, Institutional Banking and Markets, Wealth Management, International Financial Services.[1]
Subsidiaries	BankWest, ASB Bank, Colonial First State, Sovereign Limited, Commonwealth Securities and CommInsure
Website	www.commbank.com.au

Commonwealth Bank building in Martin Place, Sydney, built in 1928 -- a notable example of the Beaux-Arts style

Old Commonwealth Bank of Australia savings passbook, issued 1977.

The Commonwealth Bank of Australia (ASX: CBA) is a multinational bank with businesses across New Zealand, Fiji, Asia, USA and the United Kingdom. Commonwealth Bank provides a variety of financial services including retail, business and institutional banking, funds management, superannuation, insurance, investment and broking services. Commonly referred to as the Commonwealth Bank (or Commbank),^[3] The Commonwealth Bank is now the second largest Australian listed company on the Australian Securities Exchange as of January 2008 with brands including BankWest, Colonial First State Investments Limited, ASB Bank (New Zealand), Commonwealth Securities Limited (CommSec) and Commonwealth Insurance Limited (CommInsure).

Founded in 1911 by the Australian government, the Commonwealth Bank is one of the 'big four' Australian banks, with National Australia Bank (NAB), ANZ and Westpac. The bank listed on the Australian Stock Exchange in 1991 and the government fully privatised it in 1996.

History

Foundation and early history (1911-1941)

See also: Reserve Bank of Australia

The Commonwealth Bank of Australia was founded by the Commonwealth Bank Act in 1911, introduced by the Andrew Fisher Labor Government, which favoured bank nationalisation. In a rare move for the time, the bank was to have both savings and general bank business. The bank was also the first bank in Australia to receive a Federal Government guarantee. The bank's earliest and most strenuous proponent was the flamboyant American-Australian Labor politician, King O'Malley, and its first Governor was Sir Denison Miller.

The bank opened its first branch in Melbourne on July 15, 1912. In an agreement with Australia Post that exists to this day, the bank also traded through post office agencies. In 1912 it merged with the state savings bank in Tasmania, and by 1913 it had branches in all six states.

In 1916 the bank moved its head office to Sydney. It also followed the Australian army into New Guinea, where it opened a branch in Rabaul and agencies elsewhere.

In 1920, the bank took over from the Department of the Treasury the responsibility for the issue of Australian bank notes, the beginning of its acquisition of central bank powers.^[4]

In 1920, the Commonwealth Bank merged with the state savings bank in Queensland.

In 1931 the government transferred to the bank the savings bank business of the Government Savings Bank of New South Wales (est. 1871), and the current account and fixed deposit business of the Rural Bank Department. The bank also acquired the State Savings Bank of Western Australia (est. 1863).

Central Bank (1920-1960)

The bank's role in central banking expanded gradually after 1920. In 1931, the bank board came into conflict with the Labor government of James Scullin. The bank's chairman Robert Gibson refused to expand credit in response to the Great Depression (as had been proposed by Treasurer Edward Theodore) unless the government cut pensions, which Scullin refused to do. Conflict surrounding this issue led to the fall of the government, and to demands from Labor for reform of the bank and more direct government control over monetary policy.

In 1942, the Commonwealth Banking Corporation (CBC) suspended its operations in Papua New Guinea as the Japanese Army captured many of the towns in which it operated, and bombed Port Moresby. The bank resumed operations later, possibly in 1944.

The bank had many branches across Papua New Guinea including Port Moresby, Boroko, Rabaul, Lae, Wau, Bulolo, Goroka, Kavieng, Madang, Mount Hagen, Kundiawa, Popondetta and Wewak. On Bougainville there was Kieta, Panguna, Arawa and early on a part time sub branch at Loloho. The bank maintained those facilities to support trade, local business, government and small savers.

The Commonwealth Bank received almost all central bank powers in emergency legislation passed during World War II and at the end of the war it used this power to begin a dramatic expansion of the economy. This was also the aim of the Government at the time. The Government attempted to compel the Australian states to conduct their banking with the Commonwealth under the Banking Act 1945 (Cth), but the High Court in Melbourne Corporation v Commonwealth (1947) 74 CLR 31, blocked this move. The government also colossally expanded immigration programmes. To respond to this, the bank established a Migrant Information Service (later known as the Australian Financial & Migrant Information Service [AFMIS]). The bank expanded during this period. In just five years it opened hundreds of branches throughout Australia and in 1951 it established a branch in the Solomon Islands.

In 1958 and 1959, there was a controversy concerning the dual function of the bank as the central bank on the one hand and a commercial bank on the other. As a result of this, the government split the bank, giving the central bank function to the Reserve Bank of Australia, with the Commonwealth Banking Corporation (CBC) retaining its commercial banking functions. These commercial functions were exercised by the CBCs constituent banks, the Commonwealth Trading Bank of Australia (CTB), the Commonwealth Savings Bank of Australia (CSB) and the newly-formed Commonwealth Development Bank (CDB).

From 1958 to 1976 the Commonwealth Bank operated savings bank agencies in the New Hebrides.

Diversification (1960-1983)

A new Commonwealth Development Bank was established in 1960 and during the 1970s the bank diversified its business into areas like insurance and travel. It established a finance company, CBFC in 1974. The bank also became more heavily involved in foreign currency trading and international banking in general.

The bank actively supported the introduction of decimal currency in the years leading up to 1966 and, like most banks, it gradually converted its paper records onto a new computer-based system. The bank created the first credit card in Australia in 1974 when it established Bankcard. In later years the bank began offering Mastercards (1984) and Visa (1993) cards as well.

In 1974, as Papua New Guinea approached independence, the bank formally handed over its PNG operations to the newly created and government-owned Papua New Guinea Banking Corporation (PNGBC). The bank retained a restricted branch in Port Moresby that it finally closed in 1982.

In 1981 the bank transferred its operations in the Solomon Islands to the National Bank of Solomon Islands, which operated as a joint venture (51-49, Commonwealth and Government of the Solomon Islands).

Deregulation(1983-1991)

Old 1980s logo

In 1989 the bank acquired 75% of ASB Bank in New Zealand.

In 1991 the bank acquired the failing Victorian Government-owned State Bank of Victoria (est. 1842).

Privatisation and the Colonial merger (1990-2000)

Between 1991 and 1996 the Australian government fully privatised Commonwealth Bank. It is a public company, but one of the few such companies in Australia whose official name does not end in 'Limited'.

In 1994 Commonwealth sold its shares in National Bank of Solomon Islands to Bank of Hawaii.

In 1994, Commonwealth took a 50% share in PT Bank International Indonesia.

On 10 March 2000, the Commonwealth Bank and Colonial Limited announced their intention to merge, with seven Commonwealth Bank shares being offered for twenty Colonial Shares. The merger received final approval from the Supreme Court of Victoria on 31 May 2000 and was completed on 13 June 2000. This brought into the fold Colonial’s stake in Colonial National Bank, the former National Bank of Fiji. The bank also acquired the remaining 25% of ASB Bank.

Banking opportunities in Asia saw the Bank in 2000 acquire full ownership of PT Bank International Indonesia and rename it (PT Bank Commonwealth). This bank now has over 16 branches and has opened several FX shops to cater to Commonwealth Bank clients who are tourists in Bali.

The bank today (2001+)

In 2005, the bank established strategic co-operation agreements with two Chinese banks, Jinan City Commercial Bank and Hangzhou City Commercial Bank; it took an 11% stake in Jinan City, and a 19.9% stake in Hangzhuo. Commonwealth also established a representative office in Bangalore, India.

On 27 January 2006 the bank acquired the remaining 49% stake in Colonial National Bank (Fiji)

At the beginning of 2008, Commonwealth Bank opened a branch in Ho Chi Minh City (Saigon). Then in October, Commonwealth announced that it had purchased BankWest and St Andrew's Insurances from their parent company HBOS plc for A$2.1 billion.^[5][6] The acquisition is scheduled to be completed in early 2009, subject to regulatory approval. Lastly, on 24 December, Commonwealth announced that it had, in joint partnership with Aussie Home Loans, purchased Wizard Home Loans.^[7] As part of the deal, the Commonwealth Bank will acquire Wizard mortgages up to the value of A$4 billion. The Commonwealth Bank currently owns a 33% stake in Aussie.^[8] Commonwealth Bank held about 30 percent of the loan business of financial advisory company Storm Financial when it collapsed in January 2009.^[9]

In December 2009, Commonwealth sold Colonial National Bank to Bank of South Pacific.

Bank structure

Retail Banking Services

This division delivers financial services to personal and small business customers.

Premium Business Services

Premium Business Services was formally split into two departments in 2009, Institutional Banking & Markets (IB&M) and Business & Private Banking (B&PB). IB&M includes areas of the bank that provides services to Institutional Clients and Global Markets. B&PB includes areas of the bank that provides services to Business customers and private banking customers.

Wealth Management

Wealth Management brings together the Groups funds management platform, master funds, superannuation, insurance and financial advice business support. Colonial First State, Colonial First State Global Asset Management and CommInsure all form part of Wealth Management.

International operations/activity

The Commonwealth Bank's international presence includes:

• Retail banks in New Zealand (ASB Bank), Indonesia (PT Bank Commonwealth), and China (11% of Jinan City Commercial Bank and 19.9% of Hangzhou City Commercial Bank).
• Commonwealth Bank branches in London, New York, Tokyo, Singapore, Hong Kong and Auckland.
• Wholly owned life insurance operations in New Zealand (Sovereign)
• Joint venture life insurance businesses in Indonesia (Astra CMG); China (China Life CMG) and Vietnam (Bao Minh CMG)
• First State funds management business in Hong Kong, Singapore, London, Fiji, China and Indonesia
• Representative offices in Beijing, Shanghai, Hanoi and Bangalore.

Products and services

The Commonwealth Bank is Australia's largest retail bank and offers customers a range of products and services, including loans, credit cards, transaction and savings accounts. It has a wide presence in Australia with the largest branch and ATM network.^{[citation needed]} It also offers services to people planning to move to Australia.^{[citation needed]}

The Bank's service of business customers, ranging from small business owners to large institutional clients, is diverse and draws upon the products and services offered by all divisions of the Commonwealth Bank group.^{[citation needed]}

Subsidiaries

Australia

• CommInsure
• Commonwealth Securities
• Colonial First State
• Bankwest

New Zealand

• ASB
• Sovereign

Asia Pacific

• Colonial National Bank (Fiji)
• PT Bank Commonwealth (Indonesia)
• AMTD Group Company Limited (Hong Kong)

See also

• Reserve Bank of Australia
• State Bank of Victoria
• State Bank of New South Wales
• Australian Cricket Academy
• Commonwealth Bank Trophy
• Commonwealth Bank Series
• List of Australian companies

• 

  A CBA building in Martin Place, Sydney

• 

  CBA signage Martin Place

• 

  CBA building opposite Macquarie Bank

References

1. ^ ^{a b c} Commonwealth Bank of Australia Annual Report 2009
2. ^ Commonwealth Bank of Australia Annual Report 2010
3. ^ http://www.commbank.com.au The web domain is 'commbank'
4. ^ Commonwealth Bank - History - A brief history of the Commonwealth Bank
5. ^ Commonwealth Bank of Australia (2008). "Commonwealth Bank of Australia to acquire Bank West and St Andrew's". http://www.commbank.com.au/about-us/news/media-releases/2008/081008-news-bankwest-acquisition.aspx. Retrieved 2008-10-09. 
6. ^ Bank of Western Australia Limited (2008). "BankWest and St Andrew's sold to Commonwealth Bank". http://www.bankwest.com.au/Media_Centre/Media_Releases/Media_Releases_2008/BankWest_and_St_Andrews_sold_to_Commonwealth_Bank/index.aspx. Retrieved 2008-10-09. 
7. ^ http://www.news.com.au/business/story/0,27753,24840570-462,00.html Aussie Home Loans and Commonwealth Bank to buy Wizard Home Loans^{[dead link]}
8. ^ http://www.thewest.com.au/aapstory.aspx?StoryName=510530 CBA to buy 33% Aussie Home Loans stake^{[dead link]}
9. ^ Osborne, Paul (10 August 2009). "Storm Financial collapse plan outlined". The Age (Melbourne). http://news.theage.com.au/breaking-news-business/storm-financial-collapse-plan-outlined-20090810-ef9y.html. Retrieved 15 January 2010. 

External links

• Commonwealth Bank
• ASB Bank
• Colonial First State Investments Limited
• CommInsure
• CommSec
• Commonwealth Bank Group ephemera digitised and held by the National Library of Australia