With special thanks to Jeffrey Lee of Sydney, who kindly gave me permission to use his photo here. You can see more of his photographs via this link: http://www.flickr.com/photos/jeffrey_lee/
Commonwealth Bank of Australia
The Commonwealth Bank of Australia (CBA) was established by the Australian government under legislation in 1911. The bank was fully backed by the Australian government, the sole bank in the country with such a federal government guarantee.
In 1920, the Commonwealth Bank gained even more power when the Note Issue Board was created under the bank to assume the responsibility to issue the Australian currency on behalf of the Federal Treasury. The Commonwealth thus gained the characteristics of both a central bank as well as a savings bank. During the Great Depression, the bank expanded greatly when it took over the State Savings Bank of Western Australia and State Savings Bank of New South Wales.
Between the 1900s and 1940s, national governments around the world gradually separated central banking functions (issuance of currency, control on interest rates, management of national debt, and regulation of the banking sector etc.) from commercial banking activities (savings, lending and cash transactions for the general public). The Commonwealth’s full government guarantee and its de facto central bank status gave it unfair advantages over other pure commercial banks. After much scrutiny and controversies, the Commonwealth Bank Act and the Reserve Bank Act were passed in 1959, resulting in the creation of The Reserve Bank of Australia, which took control of all central banking functions in 1960. The Commonwealth Bank was now purely a state-owned savings and loan bank.
In 1989, the Commonwealth acquired 75% of New Zealand's ASB Bank Ltd. An important milestone in Commonwealth's history happened in 1991 when the bank was re-structured as a public company and ceased to be part of the government in the form of a statutory authority. Between 1991 and 1996, the Australian government sold off its entire holdings in the Commonwealth to the public.
- In 1991, the Commonwealth Bank merged with the State Bank of Victoria.
- In 2000, the Commonwealth Bank acquired Colonial Ltd. (including the Colonial National Bank) for AUD $9.0-billion.
- In 2007, the Commonwealth bought Australia's No. 3 on-line stockbroker IWL Ltd. for AUD $373-million (USD $320-million).
- In 2008, CBA acquired Australia’s BankWest (Bank of Western Australia) and insurer and asset management firm St. Andrew’s Australia Pty. Ltd. from ailing Britain’s HBOS plc for AUD $2.1-billion (GBP 808-million, USD $1.4-billion) in cash. HBOS had been close to financial insolvency and had just agreed to a sale to rival Lloyds TSB Group weeks earlier. HBOS plc would also receive AUD $360-million from a return of excess capital in BankWest, raising the total sale proceeds to AUD $2.5-billion (GBP 963-million, USD $1.66-billion).
- In late 2008, CBA announced it would buy up to AUD $4-billion (USD $2.7-billion) of mortgage loans from a General Electric Co. unit called Wizard Mortgage Corp. The loan portfolio is 100% insured. General Electric’s Wizard already sold its brand and 160-branch network to Aussie Home Loans, a mortgage provider that is 33% owned by Commonwealth Bank. Terms of the transaction were not disclosed.
- In March 2010, CBA sold its St. Andrew's insurance division to the Bank of Queensland for an undisclosed amount. St. Andrew's had about 165,000 policyholders.
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