Commonwealth Bank of Australia Chief Executive Ralph Norris sees room for its New Zealand subsidiary ASB to grow in business lending and had acknowledged that the Stephen Versalko fraud case was damaging for ASB's reputation.
Norris told Andrew Patterson from Radio Live in New Zealand that he didn't see any likelihood of an Australian bank pulling out of New Zealand, even though there were better returns available investing new capital in the growing Asian markets.
"Australian banks see NZ as being part of the same region with personal and commercial customers who operate on both sides of the Tasman so therefore it makes sense that Australian banks treat New Zealand as part of an Australasian market," Norris said in the interview pre-recorded last week before CBA's annual result today.
"I don't see any signficiant change in that. When you look at future growth opportunities, investment in Asia is probably going to provide better returns (than in New Zealand ) and that's the same for future investments in Australia as well. Australia and NZ are both developed economies and have growth rates that are slower than developing economies. What is true for New Zealand is also true for Australia," he said.
Asked about ASB's ability to grow further in New Zealand, he said:
"ASB in 1990 was one sixth the size of the biggest bank and is today bigger than that bank, and that was through organic growth and meeting the needs of its customers. The ASB model still has some way to go. ASB is under represented in business banking so I think ASB has a signficant growth opportunity in that area. I wouldn't discount ASB's ability to grow and from my perspective we'll be ensuring that there's investment in technology," Norris said.
"ASB has always had good technology, but we're getting to the point where we need to look at the technology that will take ASB into the next 10-15 years."
Versalko fraud
Asked about the damage done to ASB's reputation by the conviction of ASB private banker Stephen Versalko for fraud, Norris said:
"It happens. Unfortunately you have dishonest people who work out ways and means of doing things and it happens from time to time. Every bank has had employees that carry out fraudulent activities. There was a weakness that was exploited, and that has been closed down now. It's always difficult when you're dealing with people who are basically dishonest," Norris said.
"Whenever you have an occurence such as Versalko. No organistation likes the surrounding publicity. I'm not a believer there's no such thing as good or bad publicity -- there's just publicity. The fact is this is an issue that caused us some angst."
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