Commonwealth Bank of Australia (CBA) has paid a penalty of $100,000 to market regulator ASIC in relation to the obligation to disclose price sensitive information to the Australian Securities Exchange (ASX).
The bank emphasised in a statement yesterday that the payment was not an admission of liability and cannot be regarded as a finding that the bank contravened the Corporations Act.
In December 2008, CBA allegedly failed to notify the ASX in time of an increase in its expected loan impairment expense to gross loan and acceptances ratio for the financial year ending 30 June 2009.
ASIC claims the bank was aware by 3pm on 16 December that it would have to raise its forecast for the ratio from between 40 and 50 basis points to around 60 basis points.
This meant these loan impairment expenses went up from between $1.7 to $2.1 billion to $2.5 billion.
But the ASX did not receive a notification from CBA until after 7pm that day, when stock market had already closed.
CBA chief executive Ralph Norris yesterday expressed his disappointment with ASIC's decision to issue an infringement notice in relation to this issue to the bank.
"Loan impairment expense is a single line item in the group's profit and loss statement and cannot be considered in isolation," Norris said.
"As noted in our ASX announcement at the time, we were experiencing strong volume and revenue growth which, in our view, significantly offset the forecast increase in loan impairment expense, such that the impact on our overall profitability was not material."
But CBA was at the time in the middle of a capital raising, and the information should have been disclosed to investors.
ASIC said the bank had forwarded the statement around 4pm to Merrill Lynch, who was sounding out shareholders for interest in the raising.
But the information never reached shareholders.
