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Commonwealth Bank Keeps Freeze on Some Salaries, Memo Shows

Commonwealth Bank Keeps Freeze on Some Salaries, Memo Shows
Profitability at Australia’s biggest banks, called the four pillars after legislation that bans them from buying one another, is threatened by rising wholesale funding and deposit costs and as the jobless rate in Australia climbed to 5.2 percent in June, the highest since March. Photographer: Sergio Dionisio/Bloomberg

July 17 (Bloomberg) -- Commonwealth Bank of Australia, the nation’s biggest lender by market value, will freeze base salaries for people making A$150,000 ($155,000) or more in its institutional banking and markets division, according to an internal memo obtained by Bloomberg News.

Pay will be curtailed for a second year as the bank seeks to “closely manage” costs, Ian Saines, head of the division, said in the message to employees on July 3. Tracy Hicks, a Sydney-based spokeswoman for Commonwealth Bank, confirmed the content of the memo.

Profitability at Australia’s biggest banks, called the four pillars, has been under pressure by rising wholesale funding and deposit costs. The industry is “suffering from severe revenue headwinds,” Saines said. Chief Executive Officer Ian Narev is among employees who won’t receive an increase for the financial year that started July 1, Hicks said.

“We are determined to avoid making short-term decisions, including setting targets for a reduction in staff numbers or sending Australian jobs offshore,” said Hicks. The bank will report earnings for fiscal 2012 on Aug. 15.

Shares of Commonwealth Bank gained 1.6 percent to A$54.92 as of 3:58 p.m. in Sydney, extending this year’s advance to almost 12 percent. The equity benchmark Australian S&P/ASX 200 Index rose 0.8 percent. The gauge has risen 2 percent in 2012.

Australia & New Zealand Banking Group Ltd., the third-largest bank in Australia, said Feb. 13 it will eliminate about 1,000 jobs and extend a pay freeze for most senior executives as it combats a slump in lending growth. The cuts are due to be made by Sept. 30 and will involve middle-management, back-office and support staff, the bank said at the time.

To contact the reporter on this story: Adam Haigh in Sydney at

To contact the editors responsible for this story: Chitra Somayaji at; Nick Gentle at

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