CBA to shut down controversial tax dodging operation

The Commonwealth Bank will shut down their structured finance division, with department head Leanne Leong resigning after an internal review.

CBA Commonwealth Bank AustraliaThe CBA’s structured finance division was responsible for setting up and managing the bank’s controversial $5 billion tax minimisation scheme in low-tax haven Malta.

There is speculation in The Australian that the structured finance division will be shut down after the bank’s internal review raised concerns the division’s aggressive tax systems would be targeted by the Australian Taxation Office and hurt the bank’s reputation.

The Commonweath Bank has not commented on Ms Leong’s departure, the internal review of the banks structured finance operations.

CBA institutional banking acquisitions

CBA’s institutional banking division says it will not make any major stockbroking acquisitions, and will instead focus on their own internal broking and research divisions, The Age reports.

The head of CBA’s institutional banking division, Ian Saines, while not ruling out any acquisitions, has said it is ”highly unlikely” the bank would make any acquisitions in the sector, after CBA was linked to buying Royal Bank of Scotland Australian division ABN Amro.

Mr Saines told The Age that withdrawing from the ABN Amro purchase was not a major loss, given the poor performance of ABN Amro as a part of RBS, with losses in profitability and staff.

“Given what has happened since then, it was the correct thing to do, since integrating them [their respective businesses] was going to be difficult,” he told The Age.

CBA has ambitions to be a top-five player in the Australian market for institutional securities, and has taken advantage of the shake up in the industry due to  the global financial crisis, which has hurt incumbent players Deutsche, UBS, Citi and Macquarie.