Why
is the Commonwealth Bank bashing the Financial Sector Union over last year’s
attempt by the union to use the annual meeting to attack the ongoing
restructuring program of its retail operations? The
question arises after the bank produced a strong result to farewell David Murray from his long reign as the CBA’s first chief executive.

Murray leaves next month to be replaced by
Ralph Norris, the former head of Air New Zealand and before that, the head of
the ASB, the Commonwealth’s Kiwi arm.

Murray’s net retirement package looks like being around $28
million, plus whatever he earned in the year to June. That will
probably top the $5 million mark ($4.4 million in 2004) after the bank
produced a very strong rise in earnings for the year to June. Including
goodwill amortisation and the “uplift appraisal factor” of the bank’s
insurance and funds management areas, the CBA earned $3.991 billion in
2004-2005.

On the
so-called “cash basis” after tax the figure was $3.538 billion, up 31% (that
excludes the non cash good will and uplift changes).

The
better figure is the so-called “underlying basis” which saw a 13% rise in
earnings to $3.466 million. The figure judges the change in the bank’s profit
contributions from operations in banking, funds management and insurance.
Banking was up 11%, funds management up 28% (and why not, it’s been a strong
stock market) and insurance rose 21%.

Unemployment remains low, which means that the bank’s
basic operations do well, loan loss reserves and provisions remain unused
(mortgage and credit card defaults are low), and earnings growth will be
strong. But the
bank says its fortunes are more tied to the export boom and strong business
investment, not the old standbys of home loans and consumer finance.

That
tells you something about the real picture in the economy; that consumers,
exhausted by the great home loan surge and the credit card led consumer boom,
have cut back their spending and their credit card use, in turn cutting the
CBA’s revenue and profits growth from this
area.

But
with Murray going and taking his hard-line attitude to
the FSU with him, will that legal action against the union over its motion on
the notice of business for last year’s AGM be quietly wound
up? Or is
the board, led by Chairman John Schubert, just a bunch of union bashers doing
the work of the federal government?

If a
union super fund, or a privately-owned shareholder had sponsored a similar
motion for last year’s AGM, would the CBA be in court trying to bash them into
submission? The FSU
launched the annual meeting action because it was concerned that its members
were being bashed by the bank in its latest restructuring program called “Which
new Bank?”

On the
basis of this result and the profit growth claimed to be coming from these
changes, the union was entitled to raise the issue at
the AGM. Shareholder democracy
CBA-style?