Why insolvent CBA must cut Matt Comyn’s salary by 70%

Via Domain:

There has been intense scrutiny over pay for top banking executives since the damaging revelations of the Hayne royal commission. Last week the Reserve Bank of Australia said the banking regulator would soon resume work on ensuring executive pay was tied to targets that encourage good practice and culture.

CBA chief executive Matt Comyn is set to receive a base salary plus short and long-term bonuses totalling over $3.4 million, meaning his total pay for the year will be more than $5.6 million, up from $4.3 million the previous year, according to CBA’s annual report.

ISS figures show Mr Comyn’s bonus would reach $6.2 million, based on 47,957 shares being awarded in November last year. Under this calculation his total take home pay would be more than than $8.4 million.

OK, so these issues are real but they are not the real issue.

The real issue is that Matt Comyn is now running a government corporation masquerading as a privately listed firm. His liabilities are being nationalised at astonishing speed via the RBA Term Funding Facility (TFF):

If this is the only way that the RBA can now force interest rates down, by nationalising expensive bank debt, the CBA is effectively insolvent, unable to roll over its own debt in private markets and stay in business without massive taxpayer support.

That’s fair enough if the Government decides to go that way. It’s fantastically stupid but it is its choice.

What is not fair is that CBA and all other banks that use this free public money still take immense bonuses. Given the bank is insolvent without public support, it should be handing over a massive slice of equity to the Treasury along with several board seats.

If not, we are allowing capitalism to collapse ever more into a private profits, public losses oligarchic quango that will distort capital allocation for so long as it is allowed to continue. In Australia’s case that will, of course, be the ongoing issuance of too many mortgages hollowing out everything else in sight.

I’m sure that the CBA is no picnic to run. So a decent CEO salary is fair enough. Australia highest-paid public servant is the head of Australia Post on $2.5m so that looks about the right benchmark for Matt Comyn, a roughly 70% cut.

If not, then the bank can go it alone on private funding and pay its CEO whatever it likes. Which will be zero.

Early this year I predicted that the COVID-19 catastrophe would not be over before the Australian banking sector was nationalised. That time has come, on the quiet and in the shadows, delivering another hammer blow to liberal democracy to the cheers of all.

David Llewellyn-Smith


  1. How is the TFF operating so its not the same as a domestic bond? is it just a government bind that is given a shiny new name or is there more too it?

    • The TFF is just a ‘facility’ that the banks can tap for funding should they need it. Pardon me, ‘want it’ – which they all do. Or, should do.
      The constraints are that the TFF borrowing doesn’t exceed 3% of the total loan book (looks like this will or has been expanded) and that there is sufficient unencumbered collateral. Easy peasy 😉

  2. AJ has never earned his money at QANTAS
    there are plenty of examples of money for nothing
    if you look around.
    scotty from marketing??

    • +1 The australia post ceo must be wondering what they need not to do to get that CBA salary.
      As you work all the way down the line to the most hard working, back breaking, hot, long job you can find such as fruit picking, you get paid nothing. And fruit is essential.

      • Strike a light, you are on to it
        But before you can say Redhead,
        there will be machines imported to do those agricultural jobs.
        And same for most of the unemployed in white collar jobs.

        • As someone working in tech its 10x easier to get a machine to do a ceo job, the board of directors and the executive team than to get it to do complex dexterous movements.

      • Less Woke More BlokeMEMBER

        BLOKE! What?

        Picking fruit is absolutely top wages matebloke. Ask farmers! They’ll tell you!

        “We can’t believe no Australians will work for all this money we’ve lavishing on workers. And have you seen the digs? Bring your kids and dogs! We’ve got pools, bidets, ping pong tables! Did we mention the money! Lavish!”

    • Yes, Qantas has had a stranglehold on the interstate and intrastate market since Ansett fell over.

      Anyone investing in an IPO for VA2.0 (when it comes) needs their head read.

      • But straya is dominated by monopolies and oligopolies. And yes, a monkey could do the job. And often does.

  3. happy valleyMEMBER

    The RBA TFF is operating at astonishing speed because the RBA happy clappies have kicked off the bailout of insolvent banks, which they helped create?

  4. Totes BeWokeMEMBER

    Cut the head of Australia Post to $250k, and redo the sums.

    Then we might see a bit less of the obscene wages in MSM as well willing to sell their souls.

  5. I don’t think it’s true to say that the CBA (and other banks) can’t refinance their books in private markets, it’s just that the TFF is cheaper. Whether that’s good policy is a separate debate but it doesn’t mean that CBA is insolvent, they’re just taking advantage of a specific initiative as the RBA wants them to. The level of CEO/executive pay is also a worthy issue, but not really highlighted by the TFF to be honest.

    • +1 the TFF = I can’t fund my own liabilities argument is a silly claim that stretches credibility frankly.

      On the subject of CEO pay, Mr. Comyn is still earning less far less than his predecessor. CEO of the largest bank (and 2nd largest listed company in aust) earning $5.6 m is hardly obscene relative to the rest of corporate Australia? Objectively it’s roughly in-line with the average ASX100 CEO salary package from 2014). Seek, Newcrest and Challenger CEO’s all took home $10M+ in 2019, Transurban CEO was $7m + (are you suggesting that running the countries largest bank, including dealing with the RC fallout is less work than sucking the blood out of a few toll roads?) and don’t get me started on old mate Qantas.

      No issues from me on the discussion of CEO and senior management pay….. but this hardly seems like the right battle.

      • wow, you two are so confident. Btw, mark CBA’s gross loan assets down by a % approaching 10% and their entire shareholder’s equity is gone. We all know that should’ve happened already but not for deferrals and the “ok” from regulators not to classify deferrals as NPLs. They are already functionally insolvent, ALREADY!!!!
        However, not yet bankrupt because the RBA faciltiates the rolling of liabilities as they become due.
        So not a “silly” argument at all. Just the observation of an objective truth.
        You surely can not possibly think the >50% of deposits that are “on demand” would stay the course if the RBA wasn’t backstopping CBA ?
        Come on!!

        • +1
          What I don’t get is what is the release valve ie what is the negative effect of the TFF program. If, as it appears, they are filling the gap left by foreign bond issuance how is the aud not tanking let alone skyrocketing.

          • agreed, AUD path perplexing. Perhaps its 2nd, 3rd in the line of least dirtiest shirts with the USD being in #1 position.
            The thing about currencies are that in every instance they are relative valued, ie. always valued against an alternative. I can’t think of another commodities backed currency that the AUD would be weaker than (weaker in it’s performance of late). If iron ore falls then watch out below for the AUD

        • Nothing to do with confidence, simply suggesting that the TFF and salary calls here seem to be approaching the level of hyperbole vs analysis.

          Yes, we all understand the leverage banks operate with, and yes, if only x% of loans default all the equity is wiped out…. Not a new argument, and one that could have been made many times over in the past. As the TFF, recent fed budget, deposit guarantee scheme, FHOG. building grants, TARP, QE etc etc has shown….. the forces that be will do everything possible (including using almost unlimited tax payer dollars) to underwrite it. In the mean time, I can’t see how the treasury at any bank wouldn’t gobble up all the artificially cheap, domestic funding practically available to them? no is it a suprise that they would take this over offshore issuance.

          I make no comment on the value of CBA’s equity or whether this is ‘the big one’ that destroys it, but when it comes to describing an entity as ‘insolvent’ I’m not particularly interested in the philosophical idea of ‘what should be’, I’m interest in ‘what is’. So just as someone suggested below, if you think shorting the equity of CBA (or any Aussie bank) is the trade to be on, great, but I’ll put that one squarely in the too hard basket.

    • Yep, cheap funding provided by the CB. Why wouldn’t you? Sounds like sensible management at the end of the day.

  6. Jumping jack flash

    “In Australia’s case that will, of course, be the ongoing issuance of too many mortgages…”

    What? Never! Nowhere near enough mortgages, and none of them large enough. The debt is not growing fast enough to prevent the collapse.
    Unless this TFF deal equates to negative interest rates in disguise, I can’t see how it will do much, nor convince the banks to lower interest rates long term.

    “Early this year I predicted that the COVID-19 catastrophe would not be over before the Australian banking sector was nationalised.”

    Long term I predict that the governments will become assimilated into the banks, not the other way around. The banks already control everything using their debt, which everyone desperately needs, including the government.

  7. What is the collateral to the RBA for these TFF loans? Is there any time of security if CBA fails that limits the risk to the taxpayer?

        • In brief, I used to trade almost everything from the short-side. I think because I’m a glass-half-empty guy.

          But in the past year or two I’ve arrived at the conclusion that trading stuff from the long-side is the way forward. Still requires care, of course, but the risk is to the upside from here on.

  8. wonder what will break for zero first CBA or Tesla – and which will get a govt bail out first