Convergence and Cross Promotion in Commonwealth Bank - Case Study Example

Executive Summary The banking sector is looking to comply with the different needs and requirements of corporate governance and is thereby looking to strengthen and bring reforms which will help to improve monitoring and effectiveness in banking system. This will ensure better results and will highlight the manner in which the banking sector is looking towards having proper rules and reforms for the society on a large. The paper shows the manner in which Commonwealth Bank has looked towards adhering to the different needs and requirements of corporate governance. It highlights different issues which Commonwealth Bank faces like convergence, cross promotion, compliance, currency, corporate, and corporate responsibility, transparency, remuneration and other aspect. It also brings forward the different areas where Commonwealth Bank has to improve its focus on so that they are able to improve the manner in which monitoring is carried out and different ethical standards which has to be developed for better functioning. This will help to adhere to the different corporate governance requirements so that better services can be provided to the different stakeholders Content Introduction 3 Purpose of the report 3 Commonwealth Bank 3 Convergence in Commonwealth Bank 4 Cross Promotion in Commonwealth Bank 4 Compliance in Commonwealth Bank 5 Remuneration in Commonwealth Bank 5 Shareholders Right in Commonwealth Bank 6 Corporate Responsibility in Commonwealth Bank 7 Conclusion 7 References 8 Introduction The different banking financial crisis which the world economies have witnessed has made it imperative that banks look to develop strategies which will help them to achieve a high degree of corporate governance. Banks thereby look towards strengthening different reforms and improving the entire process of monitoring so that the interest of different stakeholders is protected. Commonwealth Bank has moved in the same direction and has looked towards having different process and rules through which better governance can be achieved. This will help Commonwealth Bank to determine their actions, justify their actions and ensure that they work towards protecting the interest of the different stakeholders. Purpose of the report To identify the different issues surrounding Commonwealth Bank with regard to corporate governance and ethical standards while working on the international level To identify the different steps which has been taken by Commonwealth Bank to achieve a high degree of corporate governance and ethical standards Commonwealth Bank Commonwealth Bank as the name suggests works in the banking sector and is the second largest performing bank in Australia. The bank carries out business over entire Australia and has its presence at even far off places. Since, the bank works in the service sector quality of service and customer satisfaction is an aspect which has been relied on. This has made the bank come up with an ethical code of conduct which the employees need to follow (Company Website, 2015). This has helped the bank improve its reputation and has been able to attract customers based on service quality. In addition to it Commonwealth Bank faces issues associated with different aspect of corporate governance and ethical standards and has developed rules which will help them to achieve a good international standard. Convergence in Commonwealth Bank Commonwealth Bank has looked to achieve corporate governance through the process of convergence. Convergence is a state where organizations use two or more developments so that the working environment can be improved. Commonwealth Bank in this regard has looked at using technology to achieve a higher degree of corporate governance. Integrating the different functions together has enabled the bank to work on the ethical requirements. The bank has looked towards working on the policy of transparency by allowing the customers to carry out different functions like electronic transfer, balance enquiry, cheque book request and other functions (Company Website, 2015). This has provided flexibility and ensured that the bank works on the policy of congruence through which community engagement will be achieved. This has been seen through a study which suggests that having a high degree of congruence helps to improve transparency and brings in community engagement so that their functions can be carried out (Fung & Cheng, 2010). Commonwealth Bank has been able to understand those aspect and has been able to integrate those in their service process which has thereby improved the degree of services being provided to the customers. Cross Promotion in Commonwealth Bank Commonwealth Bank has looked towards having diversity in its board and has determined the composition of board in such a manner that it represents all type of people. The bank has relied on having people from different cultural backgrounds so that adequate representation of all is ensured within the board. This has helped to move them away from the concept of any form of discrimination and look at adequate representation of the different stakeholders within the board. This has been matched by the fact that Commonwealth Bank has establishment all over Australia and has favored them in dealing with the different needs of the customers. The process has led towards maximizing the concept of corporate governance. In addition to it an ethical code of conduct has been developed which determines the manner in which different people will form part of the board. The same can be seen from the acquisition of Vietnam International Bank (Dhawan, 2010) where the business has looked at having people from all cultures to be included in the board and has brought diversity in the board. This has consolidated the position of Commonwealth Bank and has maximized the overall opportunities through which business process is being carried out and determined. Compliance in Commonwealth Bank Adherence to the different regulatory and legal requirements has been achieved by Commonwealth Bank by following the different rules which have been laid down by the Central Bank. Commonwealth Bank has looked at adopting the different principles which has been provided and complies with the different requirements so that proper compliance with the laws is achieved (Mitton, 2001). This has helped Commonwealth Bank to look at being socially ethical and have proper corporate governance norms so that the different business needs and fulfilled and the different stakeholders and better satisfied. Commonwealth Bank has complied with it as having different committee like audit committee, risk management committee, and nomination committee along with other similar committees (Company Website, 2010) has helped them to work on the same framework. This has helped Commonwealth Bank to carry out the audit process as determined and provide all information to the different stakeholders. This has helped to improve transparency and provides all the information which the stakeholders are looking at. This has been matched by the fact that Commonwealth Bank looks to adhere to the Basel III norms and ensure that all legal compliance with regard to corporate governance and ethical standards are achieved. This can be easily seen from the financial information where all information and details are provided so that they ensure transparency in the working environment (Sample Papers, 2010). The bank has also laid down the different stern actions which will be taken if they don’t comply with the different legal requirements and ensure that they remain ethical. This will help the bank to be fair and provide a justification of the different actions which has been taken and can justify the same by providing the different evidence about it. Remuneration in Commonwealth Bank Another area of consideration for Commonwealth Bank is the currency as it comprises a major part of their business activities. This requires that the remuneration process which is determined is fully justified and people are paid according to the currency which has been provided. Commonwealth Bank has provided complete justification regarding the different remuneration which is provided to the employees and have ensured that the process which is used is fair. This has helped to ensure that employees are satisfied and contend with the manner in which remuneration is determined. Having a process which determines the remuneration and other compensation has helped them to act fair. This has ensured that people don’t influence the manner in which they will be compensated and will be paid according to the level of commitment (Grant, 2005). Commonwealth Bank also while providing some incentives determines the manner in which it will be calculated and ensures that there is no error in it. This has been matched by the high ethical standards which has been set for calculating the compensation and ensures that no discrimination is done between people. This has helped Commonwealth Bank to act fair and provide complete justification to the manner in which different activities are carried out (Moxey & Priddy, 2008). Commonwealth Bank as a result has been able to win the confidence of the stakeholders and providing complete details regarding the compensation in the financial statement helps to justify the manner in which different aspect associated with compensation has been determined. Shareholders Right in Commonwealth Bank Commonwealth Bank has looked towards protecting the interest of the different shareholders by ensuring that they act in a fair manner and provide the shareholders with their right. This is evident from the fact that Commonwealth Bank looks to provide dividend to its shareholders and provides complete details regarding their working through their financial statement. Further, shareholders have a right to express their views and opinions and can also raise their views if they find something objectionable. This has helped them to pacify the shareholders and provide complete justification of the different activities which are carried out. Commonwealth Bank with this aspect has also been ethical as they have a different committee which looks to address the different issues of the shareholders and look to justify the manner in which their rights will be protected. The bank has been fully committed towards the shareholders and looks at ensuring that the owners’ interest is protected (Donaldson & Davis, 1991). Different measures and steps are being taken to adhere to the different corporate governance norm and has thereby multiplied their overall opportunity to carry out different activities. This has helped the banking sector as well as it has laid down different standards which needs to be followed. Commonwealth Bank looks to adopt the different standards which has been laid down and looks to follow them so that the determining principles which will help them to provide better services and protect the interest of the shareholders can be achieved. Corporate Responsibility in Commonwealth Bank Commonwealth Bank has also aimed at having a high degree of corporate governance by having different principles, standards and rules which all need to abide. Having different benchmarks and principles through which different decisions are taken has helped to bring about a complete change in their working environment. Commonwealth Bank policies have been such that it doesn’t provide its employees and people at high position to take steps and strategies which will influence the business and multiply their gains. In addition to it having a principle which states the code of conduct which needs to be followed by all has helped them to be better placed and has given importance to corporate governance. Having proper corporate governance rules has helped them to work in an effective manner and has impacted their growth in a positive manner (Armstrong, Mitchell, Donovan, Sweeny, 2001) Having proper rules and code of conduct which determines the manner in which Commonwealth Bank will carry out its different functions in the most productive manner. Conclusion Commonwealth Bank has thereby been able to work on the different areas and achieve the required corporate governance and ethical standards so that the business process is carried out effectively. Having proper code and measures through which performances are evaluated, code of conduct for all employees to follow, different ethical standards which has been laid down, adherence to the different legal and other requirements has helped to frame the required dimensions through which proper monitoring is achieved. This has helped Commonwealth Bank to act in a fair manner and ensure that the interest of all parties are protected so that the impact in relation to corporate governance improves and the business is carried out according to the prescribed norms. References Armstrong, A., Mitchell, V., Donovan, G. & Sweeny, M, 2001. Corporate social responsibility. Journal of Banking & Financial Service, 13 (6), 125-164 Commonwealth bank. 2015. Commonwealth Bank Corporate Governance Statement, 2002. Retrieved on March 13, 2015 from http://www.combankltd.com/web/ext/home.nsf/vContentW/About+Us--About+Us!Opendocument Company Website, 2015. Commonwealth Bank. Retrieved on March 13, 2015 from Dhawan, H. 2010. Commonwealth Bank buys stake in Vietnam International Bank. Retrieved on March 14, 2015 from www.topnews.in Donaldson, L. & Davis, J. 1991. Stewardship Theory or Agency Theory: CEO Governance & Shareholder Return. Australian Journal of Management, 16 (1), pp. 49-64 Fung, M. & Cheng, A. 2010. Convergence of total productivity among banks. Global Finance Journal, 21 (2), 201-210 Grant, R. 2005. Australia’s Corporate Regulators: the ACCC, ASIC & APRA Title Research Brief No 16, Parliament of Australia Library, Australia Mitton, T. 2001. A cross firm analysis of corporate governance on the East Asian Financial Crisis. Journal of Financial Economics, Elsevier Science Moxey, P. & Priddy, S. 2008. Corporate governance and credit crunch. Association of Chartered Certified Accountants Sample Paper, 2010. Commonwealth Bank of Australia, Harvard Sample Paper Read More