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The Commonwealth Bank could reportedly cut up to 10,000 jobs and cost around $2 billion, with the bank working with McKinsey on the plan.
The Commonwealth Bank of Australia (CBA), led by new chief executive Matt Comyne, who was appointed to the helm last year, is reportedly considering a plan designed in partnership with global strategy and management firm McKinsey & Company to cut up to 10,000 local jobs. – operating cost savings of approximately $2 billion. It has continued a close relationship between the bank and the consultancy for more than 15 years.
The largest employer among Australia’s Big Four banks, the potential cuts could see nearly 25 per cent cut to around 44,000 staff, with CBA’s headcount then falling below the ~34,000 staff at National Bank. The plan also reportedly includes closing 300 of its 1,000 branches across the country, although customers are switching to online banking and the closures are not unexpected.
“I understand the story is good and the plan is in the works,” Your Money chief reporter Leo Shanahan said of the news, which first appeared in The Australian (Your Money is a partnership between Nine and NewsCorp subsidiary Australia News Channel). With its potential implications for the government’s hopes at the upcoming federal election, the news from the Murdoch stable provides an unexpected twist.
“Matt Comyn has wanted to close branches in particular and cut costs at the bank for some time. Over the course of the next few years, a plan is basically being prepared [this cost-cutting] to make that happen,” Shanahan continued of Comyn, who replaced former McKinsey chief and global partner Ian Narev as CEO last year in the wake of an anti-money laundering crackdown that saw the bank fined a record $700 million.
Comyn has since widely criticized his predecessor in the recent Royal Commission into misconduct in the banking and financial services sector, which stemmed in part from a Four Corners report into a profit-at-all-costs culture at CBA’s financial planning division, but the bank’s relationship with McKinsey appears to remain strong – dating with even before Narev’s arrival and contains other close ties.
In 2003, CBA enlisted McKinsey in an ongoing “benchmarking” project to cut costs by $500 million — with 600 employees then in the crosshairs for downsizing after significant cuts in previous years. McKinsey continued to serve CBA in the years that followed, advising all of NAB, Westpac and ANZ on various cost-cutting and reorganization measures throughout the 1980s and 1990s – including saving Westpac from potential collapse.
Meanwhile, CBA’s group managing director of retail banking Angus Sullivan, who will be responsible for overseeing any strategy of closing branches and laying off customer-facing staff, was, like Narev, a former partner in McKinsey’s New York office who spent nine years at the strategy firm before joining . CBA in 2011. Former CFO Rob Jesudason is also a McKinsey alumnus, among others, while CBA’s strategy division leadership team continues to feature a number of former McKinsey advisors.
As for the Commonwealth Bank, it described news of mass redundancies – which The Australian said should have been kept under wraps until after the election – as “unnecessarily alarmist” and “misleading”, reiterating the need to manage costs. McKinsey, meanwhile, has traditionally declined to comment on matters involving its clients, although the firm recently pledged to be more transparent after a series of problems with its own public image.
The financial sector accounts for almost a quarter of Australia’s $5 billion in management consulting spend, with the Big Four professional services quartet Deloitte, PwC, KPMG and EY landing multi-million dollar contracts with major Australian banks in recent years – particularly in these areas. digitization. McKinsey, meanwhile, brought Telstra on another $1 billion cost-cutting program last year.
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