No investor or political backlash to Matt Comyn heading CBA

Senior Labor sources told The Australian Financial Review that they knew Mr Comyn and favoured an internal appointment to succeed Mr Narev. CBA shares rose 0.7 per cent on Monday to $79.19, outperforming the 0.4 per cent lift in the overall index for the top 200 listed companies.

Statement of confidence

By favouring an internal candidate, Ms Livingstone has provided a statement of confidence that CBA has its risk and compliance failures under control, ahead of a report into its culture and governance being released by the Australian Prudential Regulation Authority on Thursday.

"The board's expectation is that the processes already under way to improve the business will be accelerated and delivered," Ms Livingstone said. "One of the advantages of an internal appointment is that no momentum will be lost in terms of the various remediation activities that we are undertaking."

Mr Comyn, who has presided over a 60 per cent increase in retail banking profits to almost $5 billion while also lifting customer satisfaction and digital engagement, said the past six months had been challenging and his discussions with the board had been "open and transparent".

"I am absolutely committed to working with the board and the executive team addressing the current legal and regulatory and reputational issues that we are facing," Mr Comyn said. "Clearly we'll be focused on some of the elements we think needs to be improved."

'Best retail banker they have got'

Paul Skamvougeras, head of equities at Perpetual, a large CBA shareholder, said Mr Comyn's appointment "may surprise some in the market who may have been expecting an external appointment following some of CBA's recent issues".

One fund manager said: "Yes, he's been tainted by the AUSTRAC case because it was under his watch and in his area of responsibility. But when CBA sells its wealth business, it will be mainly a retail bank – and he is best retail banker they have got."

Ms Livingstone said extensive interviews with the board had revealed Mr Comyn up to the task of repairing the bank's battered reputation and restoring community trust.

"The board feels we have a good understanding of the issues, and good oversight of the work under way to address [them]," Ms Livingstone told the Financial Review.

"We also believe that Matt individually understands the issues – and has also been the architect and implementer of the programs to address the issues.

"So, in that sense, we know in detail what has happened, why it happened, and what is needed to fix it. And we are confident that Matt does too."

Some parts of CBA's culture – such as the focus on customers, technological innovation, and the approach to credit risk – remained solid, while his understanding on how to fix the bank's operating procedures and regulatory compliance "is very deep", she said.

"Particularly as a result of the work done over the last six months – as a result of the AUSTRAC allegations – we have been very impressed about the way that Matt has stepped up and taken accountability for that, and also invested time personally in understanding root causes," she added.

Spectre of regulation

Among the outsiders tipped for the role were RBS chief executive Ross McEwen and Dave McKay, CEO of the Bank of Canada.

Regal Funds Management portfolio manager Omkar Joshi said he was surprised an external candidate was not appointed and CBA may have found it hard to recruit external executives given the spectre of regulation.

"The remuneration upside probably wasn't there for other candidates, while the BEAR regime will put a cap on pay," he said. "There also isn't the opportunity to turn the business around. It's not a troubled bank operations-wise."

But Ms Livingstone suggested that the government's Banking Executive Accountability Regime did not deter offshore candidates.

Mr Comyn will receive a base salary of $2.2 million, lower than Mr Narev's, which Ms Livingstone said was necessary to meet changing community expectations – the standard against which all banks are being judged by the Hayne royal commission.

Those who have worked with Mr Comyn over the years applauded the board's decision.

"Matt is a very competent executive. I think he will do an outstanding job in the role," said former Commonwealth Bank CEO Ralph Norris.

"He has a strong intellect, and a very good operational understanding of the organisation, and certainly he has a strong focus on customers. I think those attributes together will hold him in very good stead."

Methodical worker

Former CEO of Morgan Stanley Steve Harker, who hired Mr Comyn away from CBA for a year in 2010 to run the investment bank's wealth division, described him as "somebody who was across the detail as well as understanding the bigger picture".

"He grasped complex issues and challenges very quickly and worked very methodically with teamwork to solutions."

Ms Livingstone and Mr Comyn pledged to act on the APRA report. An interim report will be delivered to the regulator by the independent panel on Wednesday and released publicly on Thursday.

"We will take the results of that very seriously and look to implement [ultimate recommendations] as soon as possible," Mr Comyn said.

Ms Livingstone thanked Mr Narev for making CBA "a more inclusive and innovative organisation", and applauded the "outstanding financial results, and consistently strong returns to shareholders" over his tenure.

CBA reports interim profit numbers on Wednesday next week.

with James Frost, Jonathan Shapiro and Phillip Coorey