Commonwealth Bank Mulls Plan to Cut 10,000 Jobs, Paper Says

(Bloomberg) -- Commonwealth Bank of Australia is working on a plan to cut more than 10,000 jobs and about A$2 billion ($1.4 billion) of costs, the Australian newspaper reported, without saying where it got the information.

The nation's largest lender is said to be considering closing as many as 300 of its almost 1,000 branches, the paper said. A reduction of 25 percent of its workforce could see 10,000-12,000 jobs go in coming years, the report said.

Chief Executive Officer Matt Comyn had wanted to keep the plan secret until at least after the May 18 national elections, the Australian said. Job cuts of that magnitude would be politically sensitive at a time the banking industry is struggling to win back public trust after an inquiry into financial industry misconduct unearthed a litany of wrongdoing.

A Commonwealth Bank spokesman said the lender doesn't comment on market speculation.

What Bloomberg Opinion Says

“Commonwealth Bank is acting an awful lot like cornered prey when things don't seem so bad.”
-- Nisha Gopalan, columist

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Commonwealth Bank has the largest workforce among Australia's big four banks, and the second-lowest sales-per-employee ratio in the latest half-year reporting period, according to data compiled by Bloomberg.

The plan seems plausible as the bank has the leeway to reduce its cost-to-income ratio to 40 percent from about 45 percent and has too many branches as customers shift to online banking, said TS Lim, an analyst at Bell Potter Securities Ltd. Australia's other banks have also been cutting costs and “there's no reason why CommBank shouldn't follow,” he said.

A QuickTake on Australian banks' woes

Commonwealth Bank shares rose 1.5 percent as of 11:06 a.m. in Sydney trading. The stock has been the best performer of Australia's big-four banks in the past year, just edging out Australia & New Zealand Banking Group Ltd.

Comyn has been CEO for just over a year, replacing Ian Narev, who stepped down after a massive breach of anti-money laundering laws that led to a record A$700 million fine and an excoriating regulatory report that concluded the bank was complacent from the top down.

--With assistance from Matthew Burgess.

To contact the reporter on this story: Peter Vercoe in Sydney at pvercoe@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Chris Bourke, Paul Panckhurst

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