MENU

Commonwealth Bank of Australia agrees to $700 million AUSTRAC fine

The Commonwealth Bank of Australia (ASX: CBA) share price could hit volatility this morning after the bank flagged that it has agreed to pay a $700 million penalty in compensation for its failure to abide by anti-money laundering laws as enforced by the regulator AUSTRAC.

On the one hand the fine is less than some market observers expected, but on the other hand $700 million is a material amount even for a bank that printed a profit of $2.3 billion for the quarter ending March 31 2018.

Investors will hope that CBA’s management can treat the cost of the fine as a one-off that can be put aside and supported by debt in order to avoid an impact on the sacred cow of dividends. If nothing else the market will now have certainty as to the cost of the AML failings debacle and the bank’s new CEO will want to draw a line under the affair.

CBA also recently agreed to pay up to $25 million in penalties after reaching an agreement with the corporate regulator ASIC over allegations it artificially manipulated the benchmark inter-bank lending rate know as BBSW.

To say Australian bankers are in hot water currently is an understatement, with the Royal Commission still running, while last week saw perhaps the biggest shock of all with the competition regulator the ACCC reportedly bringing criminal charges against an Australia & New Zealand Banking Group (ASX: ANZ) staff member and several other investment banks.

For investors the bigger picture over bank shares includes the weakening housing market and likelihood that the Royal Commission will result in tighter lending standards that could see banks’ loan books and credit growth rates shrinking.

As such it’s a space I’d watch from the side lines for now despite the seemingly attractive dividends.

This “Holy Grail” Technology Could Produce World’s First Trillionaire

One of the world’s richest people is sounding the alarm on what could be a trillion-dollar technology.

And when a tech billionaire – several times over – speaks, it pays to listen.

This could be your chance to get in on the ground floor!

Click here to discover a $19.9 trillion dollar idea — hidden in plain sight!

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!