BOQ chair Warwick Negus
Bank of Queensland chairman Warwick Negus yesterday apologised to shareholders for manifold risk management failures at the company but rejected calls from shareholders for the board to ditch PwC as its auditing firm.
Negus told the annual shareholders meeting in Brisbane that the bank was moving swiftly to remediate its compliance processes after it gave court enforceable undertakings to APRA and AUSTRAC in May to fix deficient risk management systems and anti-money laundering controls.
Apart from committing to improve its compliance monitoring and reporting, BOQ was also forced by APRA to add A$50 million to its operational risk capital requirement.
“The board acknowledges that these Court Enforceable Undertakings (CEUs) have eroded some of the trust you have in us, and we do not take these matters lightly,” Negus told shareholders.
“The board has reflected deeply on the risk weaknesses and the circumstances which led to the CEUs and has taken appropriate consequence management actions.
“With respect to the board, we have taken accountability and reduced non-executive directors’ individual base fees by 20 per cent for FY24.
“This is a highly engaged and hard-working board.
“Nonetheless, we acknowledge and take accountability for the risk failings.”
Shareholders probed the chairman on the circumstances leading to the breakdown in risk controls and later delivered a first strike on the company’s remuneration report.
More than 40 per cent of shareholders voted against the remuneration report.
However, the chairman rejected suggestions from one concerned shareholder that retaining PwC as the company’s auditing firm risked the board failing its fiduciary duty to appoint “independent auditors” to review the bank’s financial statements.
PwC has been BOQ’s auditor for the last two years and Negus told the meeting that the mandate was not likely to be put out to tender for at least another three years.
“PwC has gone out of their way to reassure us of robust practices internally,” Negus said.
“Every year PwC confirms their independence.
“We’re satisfied with PwC…they’re an organisation that have had some problems and they’re fixing them.
“Changing the audit firm is a big deal.”
PwC is under criminal investigation by the Federal Police amid revelations that staff employed in its consultancy practice shared confidential ATO information with global clients.
The scandal has resulted in the firm losing contracts with a swathe of Australian companies including Westpac, which last month put its auditing mandate to tender.
There were several tense exchanges between Negus and shareholders during the meeting.
The Finance Sector Union’s national campaign manager Paul Blackmore rang into the meeting with questions about the bank’s previously flagged plans to cut 400 staff from its payroll.
Negus confirmed the size of the staff reduction program but also indicated that more roles could be cut.
“The cuts being referred to [by Blackmore] are the productivity we need to get to over the next couple of years,” the chairman told the meeting.
“With any other roles being made redundant we will try to relocate people to other parts of the business.
“My hope is most of these will be achieved by natural attrition.”
Early in the meeting chief executive Patrick Allaway came under attack from several shareholders for an alleged flippant comment he made to an aggrieved borrower after the 2022 AGM.
The customer, whose mortgage was foreclosed by the bank, had been trying to raise his grievances with Allaway when the alleged comment was made.
While a shareholder told Negus he had also heard the CEO make the dismissive remark, Allaway denied the claim.
“Craig, you know that is not a statement I would make,” Allaway told the meeting.
Negus also said he was present during the discussion between Allaway and the customer and did not hear Allaway make the comment.
BOQ scrip underperformed most other listed banks on Tuesday and closed down 18 cents or 3.2 per cent to $5.46.