Commonwealth Bank

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Australia’s first banks were established early in the 19th century, either as private companies or as partnerships.

Commonwealth Bank 100th Anniversary

1900Australia’s first banks were established early in the 19th

century, either as private companies or as partnerships.

Government banks, created and guaranteed by colonial

(later state) governments, were established to promote land

settlement and rural development, and to accept savings

deposits.

It was in this tradition that, in 1911 (a decade after the

Australian Colonies federated), Andrew Fisher’s Labor

Government decided to establish a government bank for the

newly formed nation. In the succeeding decades, many State

Government banks established in the 19th century were

amalgamated into the Commonwealth Bank, most recently

the State Bank of Victoria (1990) and, via the Colonial merger

in 2000, the Rural Bank successor to the (Government)

Savings Bank of NSW.

3Commonwealth Bank 100th Anniversary

The Beginnings

1912-1920

Foundation

Australia’s first banks were

established early in the 19th

century, either as private

companies or as partnerships.

The Commonwealth Bank of Australia

was founded under the Commonwealth

Bank Act 1911. The organisation

was empowered to conduct both

savings and general (trading) bank

business, with the security of a Federal

Government guarantee. At that time

no other institution in Australia was

involved in both of these traditionally

separate areas of banking, nor did any

other bank have a Federal Government

guarantee.

The first Governor, Mr (later Sir)

Denison Miller, headed a staff of

twelve when the Commonwealth Bank

opened for business on 15 July 1912.

Savings bank facilities were offered at

its solitary branch, 317 Collins Street,

Melbourne (Modern Chambers), and

through 489 agencies located in post

offices throughout Victoria. During the

following year, capital city branches

and postal agencies were established

across Australia. The infrastructure and

customer base expanded after mergers with State Banks in Tasmania (1912)

and Queensland (1920). In 1916, the Commonwealth Bank’s headquarters

moved from Melbourne to newly-built premises on the corner of Pitt Street

and Martin Place, Sydney, a building which was used in the design of our

moneyboxes for many years. In 1990, the Commonwealth Bank’s headquarters

relocated to 48 Martin Place, Sydney.

4 Commonwealth Bank 100th Anniversary

1921-1960Denison Miller died in office in 1923. The following year,

a newly established Commonwealth Bank Board assumed

overall control of the organisation. In 1920, responsibility for

Note Issue had been transferred from the Commonwealth

Treasury. The next two decades saw the Commonwealth

Bank’s responsibilities expand to encompass those of a

central bank. These powers were codified by emergency

legislation enacted during the early days of World War II.

During the Great Depression of the 1930s, the

Commonwealth Bank was considerably enlarged by

amalgamations with the State Bank of Western Australia

(1931) and State Bank of New South Wales (1931). Together

with earlier amalgamations in Tasmania and Queensland,

this resulted in an expansion of retail operations into banking

chambers and a proportionately less through post office

agencies.

In World War II, the Commonwealth Bank was actively

involved in the war effort both as an agent ofcthe Federal

Government and as banker for numerous scattered Australian

and allied service personnel. As in the previous world

conflict, many employees served with distinction. The war

itself came to the organisation when some Northern Territory

branches were evacuated due to enemy action. Post-war

legislation abolished the Commonwealth Bank.

Board, returning control over the organisation’s affairs

briefly (1945-1951) to the position of Governor. A general

bank division was established and special facilities created

to provide finance for post-war activities such as housing

construction and industrial development. Home loans,

originally called ‘Credit Foncier’ loans, were first offered in

1946.

After World War II, hundreds of new branches and

agencies were opened to cater for an immense increase and

spread of population. Continuing war-time restrictions and

a shortage of building materials meant many prefabricated

structures were used. The Commonwealth Bank made

Australia’s first banks were established early in the 19th century.

Development as a Central Bank


special efforts to assist migrants with the establishment

of a Migrant Information Service. By the end of the 1950s,

controversy over the organisation’s dual functions as a

central bank on the one hand, and a trading/savings bank on

the other, came to a head. Legislative changes in the form

of the Commonwealth Banks Act 1959 and the Reserve

Bank Act 1959 formally divided the two operations. The

Reserve Bank of Australia was established on 14 January

1960 as the successor in law of the Commonwealth Bank,

assuming control of all central banking activities. The

remaining functions (trading/savings bank activities), together

with the newly constituted Commonwealth Development

Bank, became the Commonwealth Banking Corporation.

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During the Great Depression of the 1930s, the Commonwealth Bank was considerably enlarged by amalgamations with the State Bank of Western Australia and State Bank of New South Wales (1931).


1961-1991Many significant banking developments occurred

throughout the 1960s. The Commonwealth Bank cel-

ebrated its Golden Jubilee in 1962, Saturday morning

trading ceased, employment of part-time staff began

and improved career opportunities for women became

available. Decimal currency, Christmas Club Accounts,

personal loans and variations on traditional savings ac-

counts were introduced.

Diversification

During the 1970’s, our operations expanded into the

fields of home insurance and travel (1974) and we formed

our own finance company, Commonwealth Bank Finance

Corporation Ltd (CBFC), the following year. During 1988, the

Commonwealth Bank entered the managed investment and

life insurance arena with the establishment of wholly-owned

subsidiaries Commonwealth Life Ltd and Commonwealth

Management Services Ltd.

Computerisation and changing face of banking

Mechanisation had gradually replaced traditional hand

posting methods in use since the Commonwealth Bank’s

foundation. In December 1969, we introduced the ‘Black

Light’ Signature System, which recorded ‘invisible’ signatures

in passbooks enabling withdrawals at branches other than

the customer’s own without making prior arrangements.

Computers started to change the way internal processes,

telling facilities and routine operations were conducted. Our

online computer network was complete on 15 July 1985

when the Norfolk Island branch joined in. Plastic credit and

debit cards began to be used as the basis for transactions,

starting with the launch of Bankcard in 1974, then Keycard

in 1981. The Commonwealth Bank affiliated with Visa

International and Interbank Card Association (Master Charge)

in 1979. Automatic telling machines (ATMs) began with

Autobank, launched in 1981. EFTPOS (Electronic Funds

Transfer at Point of Sale) commenced in 1984. and electronic

home and office banking became available in 1985.

Overseas activities and dealings

Whilst the island branch network was being handed over

to established local banking institutions – in Papua New

Guinea (1974) and Solomon Islands (1981) – important points

of representation were opened in New York, Tokyo and

Singapore. We widened our foreign exchange dealings and

provision of services for customers engaged in business

overseas. During February 1989, the Commonwealth Bank

acquired a 75 per cent share in the New Zealand-based ASB

Bank Ltd (expanded to 100 per cent in 2000).


Commonwealth Banking Corporation

1990Australia’s first banks were established early in the 19th century,

either as private companies or as partnerships.


Deregulation of the banking industry

Deregulation of the banking industry and the subsequent

entry of foreign banks into Australia in the mid-1980s

posed significant challenges. These were met initially

with restructuring of the Commonwealth Bank’s internal

organisation. New products and services were developed,

targeted to meet the requirements of groups outside our

traditional customer base. This process culminated in the

organisation’s conversion from a government-owned entity

into a publiccompany. Ovid et aliquia quaersp icabore sint.

Deregulation of the banking industry

Deregulation of the banking industry and the

subsequent entry of foreign banks into Australia in the

mid-1980s posed significant challenges. These were

met initially with restructuring of the Commonwealth

Bank’s internal organisation. New products and services

were developed, targeted to meet the requirements

of groups outside our traditional customer base. This

process culminated in the organisation’s conversion from

a government-owned entity into a publiccompany.

Merger with State Bank of Victoria

On 26 August 1990, the Commonwealth Bank

entered into an agreement with the Treasurer of Victoria

for a merger with the State Bank of Victoria (SBV).

The Commonwealth Bank became the successor in

law to SBV on 1 January 1991, creating Australia’s

largest domestic bank and further strengthening the

Commonwealth Bank’s leadership in retail branch banking.

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1992Privatisation & Subsequent Developments

The Commonwealth Banks Restructuring Act of 1990

converted the Commonwealth Bank from a statutory

authority to a public company with conventional share

capital and part-Government ownership. On 17 April

1991, the organisation became a public company with

a share capital governed by the Corporations Law but

subject to certain overriding provisions of the Com-

monwealth Banks Act 1959. The Commonwealth Bank

was fully privatised in three stages from 1991 until

July 1996.

Focus on customer service

Beginning in September 1993, the centralising of back-

office processing from branches, led to the establishment

of Central Processing sites in all States. This restructuring

of the Branch network gave staff the opportunity to focus

exclusively on retail customer service. Business Banking

Centres were established in 1994 and Customer Service

Centres were opened Australia-wide in capital cities in

1993-1994. The Customer Relationship Model (CRM) was

introduced into branches from August, 1994. This featured

uniform branch interior design and new ways of interacting

with customers. In 1997 the Relationship Management

Program was introduced which provided a personalised and

dedicated level of service through Relationship Managers to

the Bank’s High Value Clients (HVC).

The Which New Bank (2003) program aimed at “great

customer service, engagement of people and simplified

process”. In September 2005, customer service was made

a strategic priority by new Chief Executive Officer, Ralph

Norris. A new business unit, Group Sales and Service

Support, established in April 2006, had the purpose of

imbedding a service and sales culture across the Group.

New information technologies also impacted our

interaction with customers. A computerised customer

service program, ASSIST, was initiated in May 1992.

CommSee, the Commonwealth Bank’s new customer

service system, began by supporting our premium

customers and has developed as a relationship management

service model aimed at providing a single view of dealings

with individual customers, accessible from any branch

across the network. In December 2003, a decision was

made to implement CommSee across the organisation with

the national rollout completed in December 2005. The Core

Banking Modernisation (CBM) program, due for completion

in 2012, is modernising the Group’s core banking systems

and processes and introducing a world class technology.


Automated banking

The Maestro and Cirrrus services were introduced in April

1993, enabling worldwide EFTPOS, keycard and credit card

transactions. The Commonwealth Bank’s internet site was

launched on 29 September 1995 and, on 28 February 1997,

NetBank was launched as a totally online service, offering 24-

hour internet transaction banking services. Commonwealth

Securities Limited (CommSec), a new stockbroking company,

was established on 25 July, 1995, initially as low-cost

telephone based and by 2008 had won the AFR Smart

Investor Ribbon Award for ‘Online Broker of the Year – Fully

Featured’.

Strengthening the customer base

Institutional Banking was established in 1990 and drew

together the Commonwealth Bank’s various ‘wholesale’

activities under one unit providing a more focused approach to

larger organisational and corporate customers. A restructure

in 2002 provided niche services for premium and business

customers as well as refocusing services for institutional

customers. In 2004 Private Client Services became

Commonwealth Private Bank, catering to the financial needs

of high net worth and high income earning individuals. Since

2006, with the Business Growth Strategy, one of the key

priorities for the Bank’s strategic vision is to expand business

banking.This is done with local business bankers with

specialised staff working in local communities, corporate

and business customers with more complex needs serviced

through a relationship manager and the delivery of total capital

services (TCS) to institutional clients.

Colonial merger and development as a Financial

Institution

In June 2000, the Commonwealth Bank acquired the

Colonial Group of companies which provided us with a well-

established asset management capability, strong distribution

breadth, a pre-eminent wealth brand, and a leading life

insurance and property position in the market. A new

Investment & Insurance Services division was established in

2002 to incorporate the Colonial brand of companies which

included managed funds, master funds, superannuation

and insurance products, as well as the support of third party

financial planners.

The Investment and Insurance Services division was later

renamed Wealth Management to more accurately reflect

the nature of the business. The Commonwealth Bank has

become a financial services institution in the broadest sense.

The Investment and Insurance Services division was later

renamed Wealth Management to more accurately reflect

the nature of the business. The Commonwealth Bank has

become a financial services institution in the broadest sense.


Expansion into Asia

In February 2002, International Financial Services was established

to unite numerous offshore operations within the one division

and to leverage our existing expertise into target global markets.

Products also included Asian insurance and New Zealand and

the Pacific banking and insurance. By 2005, the Commonwealth

Bank’s regional expansion strategy was focused on the Asia-Pacific,

particularly China, India, Indonesia and Vietnam, where the demand

for financial services was experiencing particularly rapid growth.

This expansion was illustrated in 2005 by joint ventures with two

Chinese banks, the Jinan City Commercial Bank (now Qilu Bank)

and Bank of Hangzhou (HZB). A branch was opened in Shanghai,

China, in March 2010 and the Bank’s North Asia office is relocating

to Shanghai at the end of 2010. In August, 2010, a branch opened

in Mumbai, India, as a step towards creating a commercial banking

business there. In 2007 the Group’s first merger in Asia was

completed with the acquisition of the Bank Arta Niaga Kencana

(Bank ANK) which doubled the staff and retail branch network

of PT Bank Commonwealth, Indonesia, and continues to grow.

A branch opened in Ho Chi Minh City in August, 2008 and in

September, 2010 the CBA Group and Vietnam International Bank

(VIB) completed arrangements for a joint partnership.Ta cum ex

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Australia’s first banks were established early in the 19th century,


Australia’s first banks were established early in the 19th century,




Australia’s first banks were established early in the 19th century, either as private companies or as partnerships.

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Documents

Commonwealth Bank