ASB CEO Vittoria Shortt says she has been held accountable for an annus horribilis for the bank via a pay cut

ASB CEO Vittoria Shortt says she has been held accountable for the bank's major legal setbacks through a pay cut.

On Wednesday ASB reported its annual financial results. Profit fell 4% in a year that saw the bank settle a class action lawsuit, brought on behalf of thousands of its customers, by agreeing to pay $135.6 million. Additionally ASB received the highest anti-money laundering penalty ever imposed by a New Zealand court of $6.731 million.

"None of us like making mistakes," Shorrt told interest.co.nz.

"There's not one person at ASB, including myself, that wants to make a mistake. And unfortunately, some have been made. So we put it right and there are consequences. The executive and myself have been held accountable for these things. So I think that's an important part of being an accountable CEO."

Shortt said the bank's board considers things that occur and applies consequences to, for example, remuneration, with executives being held accountable. 

"Every year the board will go through and they will make decisions and yes, that [a pay reduction] has occurred for this year."

Figures in the annual report of ASB's parent Commonwealth Bank of Australia (CBA) show Shortt's total statutory remuneration down 7% year-on-year to A$2.93 million from A$3.15 million the previous year. The report also shows Shortt received 37% of her maximum potential short-term variable remuneration, with other CBA executives receiving between 74% and 92%.

However Shortt, who has been with the CBA group since 2002, had A$2.78 million of deferred awards that vested during the June year. Shortt is paid in the NZ dollar, with the values disclosed by CBA impacted by exchange rate movements.

Loving her work

Meanwhile Shortt, the country's longest serving major bank CEO having been in the job since February 2018, said she continues to enjoy her job.

"I think it's a brilliant business and I love working with our customers and our people. And I don't think there's a CEO around that would say that being a CEO is an easy job, right? But it's a wonderful business and everyone here is really committed to trying to do the best by our customers."

"We're really pleased this year that more customers are choosing ASB than ever before. We've grown right across the board," Shortt said. "We're at or above [overall] market [growth] for every major part of our business."

The class action law suit settlement came without ASB admitting liability for alleged breaches of the Credit Contracts and Consumer Finance Act relating to customers with home and personal loans between June 2015 and June 2019.

In its Anti-Money Laundering and Countering Financing of Terrorism Act case, ASB co-operated with a Reserve Bank investigation and admitted liability for all seven causes of action. The Reserve Bank didn't allege ASB was involved in actual money laundering or the financing of terrorism.

In a judgment confirming ASB's anti-money laundering penalty, Justice Laura O’Gorman said standards had fallen "far below the expectations reasonably placed" on one of the country's biggest banks. Justice O’Gorman was also critical of ASB's failure, over three years, to classify transactions relating to terrorism financing and child exploitation as presenting a high money laundering or terrorist financing risk.

Asked about this Shortt said the High Court accepted "there's no suggestion that ASB was directly involved in any of that activity." 

"All of the alerts were reviewed. And if they were suspicious, we did refer those to the police. So those are, I think, the key points that are important."

"We've apologised that we didn't move quickly enough. And we've put in new systems and processes. So, you know, I think that's really important. We've been operating inside of our SLAs since February of 2024," Shortt said.

SLAs are service level agreements covering the timeframes for resolving transaction alerts and unusual activity reports.

ASB contraventions cited in the Reserve Bank's statement of claim include that between 12 December 2019 and 28 February 2024 the bank failed to resolve 120,771 standard priority alerts within the required timeframe, involving transactions worth about $11.62 billion, and 595 high priority alerts involving transactions worth about $492.7 million. 

Another contravention cited was that ASB didn't conduct ongoing customer due diligence on 2,624 foreign trust customers during a period in which they engaged in 655,115 transactions worth about $9.37 billion.

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