CBA appoints new CEO in leadup to to royal commission
Matt Comyn faces the challenge of leading CBA over hurdles including the upcoming banking royal commission. Critics are saying the bank has missed an opportunity to make a fresh start.
Not one of the country's top big bank economists believe the Royal Comission into the Banking and Financial Services Sector will harm the economy, a survey of Australia's leading economists has found.
In an effort to ward off the sector-wide inquiry, Commonwealth Bank CEO Ian Narev told a Parliamentary hearing last year the investigation would hit confidence among overseas lenders that banks rely on for funds.
"[Those funds] create the economic activity that will create jobs," he said, echoing the lobbying efforts of the Australian Bankers Association.
But not one of the country's top 12 market economists including six employed by the big banks, ANZ, Commonwealth, Westpac, St George, National Australia Bank or Macquarie defended the argument that a royal comission would harm the economy.
"Pass on this question please," said St George Bank economist Besa Deda. "No comment," responded Wespac's Bill Evans.
"A strong, well-regulated and well-governed banking system is in the best interests of all Australians," added the Commonwealth Bank's Michael Blythe.
Academic and industry economists were more liberal with their opinions, a week before hearings kick off in Melbourne.
Australian National University economics professor Renee Fry-McKibbin said it was unlikely it would harm the economy in terms of a reduction in gross domestic product growth.
"It should be held under higher scrutiny than other sectors given the protection that it is provided," she said.
Others were more scathing.
"The claims are just special pleading from the banks and its lobby groups," said Bill Mitchell from the University of Newcastle.
"They have always felt they are 'special' while rorting massive returns out of the economy with little productive benefit, and which are way out of kilter with international returns from the same sector."
Three of the economists surveyed by the 2018 Business Day Scope econonmic survey said the inquiry would acutally help the economy.
"The royal commission should help to restore public trust and build momentum to reform the financial services sector in the interest of consumers," said Industry Super's Stephen Anthony.
"This should all be a net positive for Australian households and small business over the medium to longer term."
Monash University economist Jakob Madsen said by the time the royal comission is complete in 2019 it could restore trust in the sector.
"If the public loses confidence in the financial sector it can have devastating economic consequences," he said.
"Furthermore, if the banking system unjustly continues to enhance its already very lucrative profits, it will aggravate the increasing income inequality trend we have seen over the past few decades"
Market economist Shane Oliver from AMP Capital was the most circumspect of the forecasters.
"Having the royal commission itself puts a bit of a cloud over the banks for 12 months or so but its unlikely to significantly harm the economy," he said.
"It will only cause significant harm to the economy if it leads to an overly harsh increase in the already significant regulatory burden imposed on the banks such that it substantially reduces the ability and willingness of banks to lend."
The royal comission will begin its hearings before former High Court Justice Kenneth Hayne on February 12.