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Aussie Home Loans founder John Symond — one of the Commonwealth Bank's biggest individual shareholders — said he is shocked and disappointed about the latest scandal to hit Australia's biggest bank.
Mr Symond, whose Aussie Home Loans is now fully owned by CBA, expressed concern about culture and accountability issues that the banking regulator APRA will be investigating in its inquiry announced this week.
After CBA's latest scandal, Mr Symond is of the view that a royal commission into banks is "certainly on the cards".
However, he urged CBA to get on with fixing "cracks in governance" that led to allegations that it breached anti-money laundering laws on almost 54,000 occasions.
"I think there is a way out for the CBA and that is to be transparent with the regulator," Mr Symond told The World Today.
"The banks are representative of the Australian economy and I think it's essential that confidence is given back to the public."
Mr Symond said he was caught off guard by the news that CBA was being taken to court by the anti-money laundering agency, AUSTRAC.
"Like everybody, I am shocked and disappointed and scratching my head," he said.
"But I am confident that the bank will address these allegations and charges very responsibly and tighten up their governance.
"Nobody's happy about it. I want them to fix it and I want confident to be restored to public, consumers, shareholders and staff."
AUSTRAC fallout 'sad' for retiring CBA CEO Narev
Mr Symond backed the leadership of CBA chairman Catherine Livingstone in managing the latest crisis and this week's move by the Australian Prudential Regulation Authority to examine culture, accountability and governance at the CBA.
He was also sympathetic to chief executive Ian Narev, who will leave the CBA by 30 June 2018, after the CBA board expedited "succession planning" for his replacement.
"The circumstances are very unfortunate. It's sad for him," said Mr Symond.
"But he's the one on watch and he's got to accept that responsibility."
Mr Symond — whose Aussie Home Loans was built in the 1990s by attacking the culture of the big four banks — said he was disappointed that improvements in culture had been diluted in recent years.
"Their culture and vision on face value has been very good and this is why we are shocked at these allegations," he said.
Mr Symond would not rule out a royal commission into banks as a result of the latest scandal.
"I'm not a fan of royal commissions because they can take several years and can waste hundreds of millions of taxpayers' money," he argued.
"But it's certainly on the cards, although there's already a dozen different inquiries going."
CBA hands top market position back to The Big Australian
Mr Symond's concerns come as the Commonwealth lost its status as Australia's biggest company by market value to BHP, with CBA's shares down more than 8 per cent so far this year.
CBA's market capitalisation has fallen to $131 billion, allowing BHP to regain top position with a value of $139.9 billion and a rise in its share price of 7.2 per cent this year.
The Commonwealth Bank's shares fell 3.9 per cent on investor concerns the day after AUSTRAC announced it was taking CBA to court on allegations that it breached anti money laundering regulations.
The bank is now facing a potential lawsuit by shareholders for failing to disclose AUSTRAC's investigation when the board became aware of it.
CBA recently bought John Symond's remaining 20 per cent in Aussie Home Loans, giving him an estimated $340 million from the sale of his holdings.
Follow Peter Ryan on Twitter @peter_f_ryan and on his Main Street blog.
Topics: banking, company-news, regulation, business-economics-and-finance, australia