CBA slashes value of CFS as former exec gets massive payout
The Commonwealth Bank (CBA) has today revealed it made a $32.8 million payout to a departing senior executive of itsColonial First State(CFS) funds management arm, at the same time as announcing a $426 million write down of its funds management and life insurance businesses.
The bank revealed the CFS executive received $3.39 million in incentive payments for the previous year, $26.54 million as a result of a contract signed at the time of the CBA’s purchase of Colonial in 2000, and $2.82 million in entitlements and remuneration for the current year.
While not naming the executive today, the bank said they had resigned from the group this year.
Last month, CFS’s long running and high profile chief executive, Chris Cuffe, resigned from the organisation to take up the role of chief executive with CPH Investment Corporation (CPHIC), the investment group owned by Kerry Packer's Consolidated Press Holdings (CPH).
Meanwhile, the $426 million drop in the value of the bank’s funds management and life insurance operations sent its net profit tumbling by 48 per cent to $622 million for the half year to the end of December 2002.
CBA chief executive David Murray says the devaluation reflected increased volatility and uncertainty in world equity markets, as well lower fund flows into the sector.
The bank’s total funds under management plunged by $11 billion to $95 billion in the half year.
“The funds management result was affected by cautious investor sentiment caused by poor investment markets. Industry flows into the retail market were down 40 per cent for September 2002 quarter compared with the previous year,” Murray says.
Murray says the bank expects to achieve modest growth in cash earnings over the current half year.
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