APRA chairman Wayne Byres on Monday said the inquiry by an independent APRA-appointed panel follows damage to the bank’s reputation and public standing by a range of issues, most recently allegations it breached laws to combat money laundering and terrorism funding.

“The Australian community’s trust in the banking system has been damaged in recent years, and CBA in particular has been negatively impacted by a number of issues that have affected the reputation of the bank,” Byres said in a statement.

“Given its position in the Australian financial system, it is critical that community trust is strengthened.”

Commonwealth Bank, whose chief executive Ian Narev last week announced his retirement following the allegations by AUSTRAC related to money laundering and terrorism funding, said it supports the inquiry.

Narev – whose six-year tenure as CEO has also included questionable conduct at CommInsure, a first strike against executive remuneration, compensation over poor financial advice, and mis-sold credit card insurance – said the inquiry would strengthen moves the bank had already made to improve conduct and practices.

“We are confident that our 50,000 people come to work each day to give their best, for the benefit of our customers,” said Narev, who will leave before the end of the current financial year.

“At the same time, we know that our mistakes have hurt our reputation.”

The probe into CBA, the largest company listed on the Australian Securities Exchange, is expected to run for six months and will be funded by the bank.

“The overarching goal of the prudential inquiry is to identify any core organisational and cultural drivers at the heart of these issues and to provide the community with confidence that any shortcomings identified are promptly and adequately addressed,” Byres said.

– AAP