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CBA Chief Sees Compensation Nearly Halve
Ralph Norris, chief executive of Commonwealth Bank saw his pay packet cut by 47 per cent during the last financial year, receiving total compensation of $8.64 million. In the previous financial year, Mr. Norris earned a package of $16.2 million, however this year, due to a change in the value of his long term incentive, his remuneration fell.
Mr. Norris will step down as chief of CBA in November, and during the course of the year received $4.76 million in cash, of which his base pay was $3.12 million, and a short term incentive package of $1.64 million according to CBA’s annual report.
Additionally, Mr. Norris received $1.82 million of compensation in the form of company shares and rights as his long term incentives. The previous financial year, the value of these incentives stood at $9.19 million.
CBA performed better than expected in the previous year and as a result Mr. Norris long term bonus reflected that.CBA’s net profit rose 20 per cent to $5.66 billion in 2009/10. In the most recent financial year, the bank produced a 13 per cent increase in net profit of $6.4 billion. According to CBA, 59 per cent of Mr. Norris’s compensation package was tied to performance.
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IAG Buys Stake In Chinese Insurer
Australian insurance major IAG is diversifying its earnings base by taking a strategic stake in Chinese general insurance company Bohai Property Insurance. IAG will pay $100 million for a 20 per cent stake in the property and casualty insurer.
The company is seeking to increase the proportion of revenue that is generated from Asia according to chief executive Mike Wilkins.
“Bohai Insurance is an attractive partner and provides an exciting opportunity for us to meet our long-held ambition of entering China’s general insurance market,” Mr Wilkins said.
“Once the partnership is complete, IAG will have a foothold in the two fastest-growing economies in Asia and most populous countries in the world – China and India.
“Together with our established businesses in Malaysia and Thailand, this puts the group’s Asia division well on track to meet its target of contributing 10 per cent of IAG’s gross written premium by 2016, on a proportional basis.”
Bohai is mainly an insurer of motor vehicles and sell is products through a direct branch network that is 265 strong based in cities and provinces, as well as through a network of agents.
The company was established as recently as 2005 and does a gross written premium on an annual basis of $200 million. The deal values the business at $500 million.
Craig Emerson, Minister for Federal Trade says the transaction represents the future of the commercial relationship between Australia and China.
“Australia has been a reliable supplier of China’s huge mineral and energy needs for decades now,” Dr Emerson said. “This will not change. But as China transforms its economy towards domestic consumption, Australian companies are being offered a panoply of new investment opportunities.
“Today’s agreement between IAG and Bohai is a pioneer of this diversifying economy,” he said.
CBA Has Ambitious Plan For Mobile Applications
Ralph Norris, chief executive of Australian banking major CBA says the biggest threat to its payments business could come from Telstra and Facebook, rather than banking rivals.
Mr. Norris made the comments when he introduced the lenders plans to launch a number of consumer applications, whilst unveiling the record $6.84 billion full year profits of the bank.
Whilst chalking up a stellar result Mr. Norris was less than sanguine about the future, warning that the world remains in the midst of a global financial crisis.
CBA’s mobile application development is part of its ambitious plan to modernize its core banking platform, which will cost it $1.18 billion which is expected to be complete by 2013.
“One of the great things is, the core banking system is the enabler that is going to enable us to do this (apps) … with what we’re going to release you need to have a real-time system,”
“We’ve got to remember that our business is not going to be just about competing against banks or other current players in the current payments system.
“It’s against telephone companies, it’s against providers of technology themselves, the new social media entities and all the rest of it so you have to have new features and functions that will resonate with people using those sorts of facilities.”
So far ten million individual customer accounts have already migrated onto the new platform, with all other products to follow suit. CBA expects to begin migrating its business customer accounts, as well as those holding savings and investment accounts later in the year.
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St George Cuts Home Loan Rates
St George Bank, the subsidiary lender of Australian banking major Westpac is now offering arguably one of the most competitive mortgage interest rates in the market for two year fixed rate home loans, after it cut its rate by 10 basis points to 6.89 per cent. St George is also unilaterally cutting its three year fixed rate mortgage by 30 basis points to 6.99 per cent.
St.George Bank Chief Executive, Rob Chapman, said: “Customers are increasingly focused on managing their household budgets and we’ve seen continued interest in our fixed rate home loans, which provide the reassurance of mortgage repayments locked in for a fixed period.
“The changes we have made to these fixed home loans offer customers some of the most competitive rates in the market.
“We expect these reduced fixed rates to be welcomed by customers seeking greater interest rate certainty.”
The St George chief says that the lender is providing its customers with the ability to split their mortgage between fixed and variable, as well as offering a range of other flexible loan options.
In addition to the St.George Advantage Package’s home loan discounts, Advantage Package customers also gain access to savings on home loan, credit card and transaction account fees.