D-day looms for Colonial execs

Commonwealth Bank will officially takeover Colonial on June 13 and a shake-up of senior Colonial management is expected the following day.

Commonwealth Bank will officially takeover Colonial on June 13 and a shake-up of senior Colonial management is expected the following day.

Money Management understands that a number of senior executives will go, with Colonial State Bank being the likely area for job losses.

However, Colonial chief executive officer Peter Smedley will be joining the Commonwealth board, suggesting many other parts of Colonial’s operations are to remain intact.

Chairman David Adam confirmed Colonial’s Melbourne head-office function will cease, although a number of staff will remain in Melbourne. The State Bank and Colonial First State funds management operations are already based in Sydney. Adam expects some of the Colonial brands to remain under the merger.

The final part of the take-over jigsaw was concluded last week when the Victorian Supreme Court approved the take-over. Colonial shareholders, preference holders and options scheme members had voted the day before to approve the take-over. There was little dissension in the vote, despite some objections from the floor with in excess of 98 per cent in favour.

Shareholders concerns at the meeting centred on a Daewoo loan that had gone wrong and the cash-for-comment scandal involving Sydney broadcaster Alan Jones.

The loan was for $70 million, but Adam said $40 million had now been written off as a bad debt. Because the loan defaulted outside the NSW indemnity on bad debts, this money could not be recovered from the NSW State Government, Adam says.

The chairman argued that Alan Jones had provided a range of services to Colonial and the State Bank had not paid for him to make favourable comments on air. A number of shareholders disagreed and cited sums of $500,000 being paid to Jones, which Adam vigorously disputed.

Colonial shareholders will be receiving seven Commonwealth shares for their 20 Colonial shares and the new shareholders will make up 28 per cent of the bank’s share registry when the deal is completed.