News Service from House Harris

FSU applauds CBA's offshoring commitment, pay rise not enough

MELBOURNE, April 17 AAP - Commonwealth Bank of Australia (CBA) has bowed to community pressure over excessive managerial incomes, announcing a pay cut to the salary package of its chief executive.

The 10 per cent cut to the $3.12 million base salary of chief executive Ralph Norris takes effect from July.

The winding back in remuneration comes as the bank moves to preserve jobs through other wage-limiting measures as the deteriorating economic outlook crimps profits.

CBA says it will not shift jobs offshore for the next three years and is attempting to avoid a major redundancy program through limiting wage growth to 1.5 per cent for the 70 per cent of its 40,000 staff that earn less than $100,000 a year.

The bank's board of directors will also have their directors' fees cut by 10 per cent and CBA's ten-strong executive team will take a five per cent cut to their base salaries, which range from $800,000 to $1 million a year.

"Although we are one of the strongest banks globally, as we have previously indicated, we are likely to experience slowing business volumes and higher bad debt expenses, which will impact upon our profitability," Mr Norris said in a statement to staff on Friday.

"Typically, in such situations, organisations embark upon major redundancy programs which, while addressing pressures in the short term, often leave organisations significantly under-resourced to respond to the inevitable recovery.

"To this end, in order to preserve jobs as best we can and tailor our costs to a weaker economy, the board, which froze its directors' fees for the current financial year, has now decided to cut its directors' fees by 10 per cent for the coming year."

Middle management roles, which pay more than $100,000 per year, will be subject to a 12-month freeze on both base salaries and short-term incentives, CBA spokesman Bryan Fitzgerald said.

Executives at the bank's New Zealand arm, ASB Bank, will also take a pay cut, the size of which is undisclosed.

Mr Fitzgerald told AAP that the bank decided on the 1.5 per cent remuneration threshold due to the government's decision to pay a bonus to taxpayers earning less than $100,000 as part of its $42 billion stimulus package.

CBA had given a commitment to avoid moving any jobs offshore for the next three years and would retain its call centres and operations processing centres in Australia for the same period, Mr Fitzgerald said.

"There was a decline in our half year 2009 profit and Ralph (Norris) and the executive committee leading from the front by volunteering to take the pay cut was a good example," he said.

The Finance Sector Union (FSU) welcomed the executive pay cuts and the CBA's commitment to avoid redundancies, saying the efforts to rein in costs may have preversed possibly thousands of job losses.

"That has probably saved literally thousands of jobs which we understand may have been under review by the bank," FSU director of national policy Rod Masson said.

"If they have committed not to send jobs offshore, then they have distinguished themselves among other banks," Mr Masson said

"The 1.5 per cent (pay rise) is certainly well below the CPI amount as it's tracking and employees of CBA would still be doing it tough."

Mr Masson said the FSU wanted a legally enforceable guarantee that CBA would not cut more jobs, after its BankWest arm announced 400 jobs would go last month.

Mr Norris made a commitment to preserve jobs at BankWest when CBA acquired the lender from HBOS Australia last year.

CBA shares closed up 24 cents at $37.00