Ethics and Financial Services: CBA Stakeholder Analysis Report

This report provides a comprehensive analysis of the Commonwealth Bank (CBA), examining its stakeholders, their contributions, and expectations. It explores the application of ethical decision-making models and stakeholder theory to understand stakeholder behavior. The report delves into ethical dilemmas faced by the CBA, such as balancing shareholder dividends with business expansion and managing customer expectations for interest rates. Furthermore, it offers recommendations for change, focusing on corporate governance, management strategy implementation, and employee professional behavior to repair the bank's reputation and restore stakeholder trust. The recommendations include policies for ethical financial practices and early reporting of suspicious transactions, emphasizing the importance of ethical conduct and effective strategy implementation within the bank. The report highlights areas for improvement and suggests actionable strategies for the CBA to regain its reputation and rebuild trust among its stakeholders.

Ethics and Financial Services 1
ETHICS AND FINANCIAL SERVCIES
By (Student’s Name)
Professor’s Name
College
Course
Date

Ethics and Financial Services 2
ETHICS AND FINANCIAL SERVCIES
Part B: Commonwealth Bank Stakeholder Analysis
1. Stake of Stakeholders’ Contribution and Expectation:
Directors and Management
Contribution: The directors contribute to the CBA by making the policies and strategies
that are implemented by the management of the Bank. The directors ensure that the affairs and
strategy of the CBA are undertaken completely, in the interest of the public, and ethically,
according to the law alongside policies of Board of Governors. The directors must be responsive
to public needs. The management works on behalf of the shareholders and owners of the bank to
ensure that they oversee running of the branches and being responsible for meeting hard sales
target as well as keeping staff completely trained and motivated.
Expectation: Directors expect that the management will adhere to the policies set by
them while the management expects better pay and growth of the business.
Shareholders
Contribution: The shareholders meaningfully contribute to the effective bank
governance. For example those with seats on board have positions and incentives to provide
certain checks and balances important to governance.
Expectation: Shareholders expect better dividends growth and better share prices and
dividend payout ratio.
Customers
Contribution: The customers are the main drivers of banks success. They provide
deposits that runs the bank payment system. They also buy bank products and services which

Ethics and Financial Services 3
ensure banks can survive the competitive market. The customers also acts as marketers for banks
at no charge by bringing their relatives, families and friends to open bank accounts and deposit.
Expectation: Better and qualities services affordable to them and satisfaction and
efficiency of services.
Employees
Contribution: The employees have the key role of making customers increasingly loyal.
By offering efficient and customer satisfaction through the creation of good feelings towards
bank, and moving towards satisfied and eventually appreciative clients.
Expectation: The employees expect better remuneration, leaves, promotions, rewards
and valued and engagement in decision making.
Government/Regulators
Contribution: The regulators contribute to the bank by ensuring there regulations and
laws that safeguard the banks from engaging in criminal activities or suffering at the hand of the
criminals.
Expectation: The regulators expect total compliance with the laws and regulations and
ethical conduct by the bank.
2. Stakeholders Behavior based on Models
Ethical Decision-Making Model
Ethical decision making remains an integral share of social work practice. Each day,
banking workplace is faced with ethical dilemma which calls for thoughtful reflection alongside
critical thinking. The directors and management for example, are always faced with dilemma of a
choice between 2 actions anchored on opposing professional values; each might be correct
morally and grounded professionally. Thus ethical decision model remains an important model

Ethics and Financial Services 4
for the CBA as they are encouraged to use it because it promotes critical thinking and reflection.
Each stakeholder might have a different behavior and hence leading to ethical dilemma. For
example, customers of the bank will require low rates of interests for the bank loans while
management may see this as a loss to them hence charge higher interest. Thus, the ethical
decision model will help the management to solve this dilemmatic situation in a manner that
leads to a win-win situation. Another ethical dilemma might be between the shareholders and
the management or directors. For example, while the shareholders might need to be paid much
dividend, the management might prefer to remit bank’s profit to the business to trigger expansion
(Lehnert, Park and Singh 2015).
In this case, the ethical decision-making model will help both shareholders and
management to reach an amicable solution that creates a balance between the two opposing
parties in the interests of the bank, the public and the shareholders by upholding the core values
in the bank. Such core values could include respect for inherent dignity and worth of individuals,
pursuit of social justice, and service to humanity, integrity in professional practice,
confidentiality in professional practice as well as competence in professional practice (Kocet and
Herlihy 2014).
Stakeholders Theory/Normative Theory/Descriptive Theory
Stakeholder theory is a model of managing organization and business ethics. It tackles the
moral as well as values in the organizational management. This theory is helpful in the case of
CBA as it provides effective means through which CBA can show regard to each interest group
including customers and shareholders and management/directors themselves by attempting to
tackle the “principle of who/what actually counts”. Unlike traditional view of the firm,
shareholder perspective, solely the shareholders/owners of organization stay significant, and the

Ethics and Financial Services 5
company has a binding duty (fiduciary) to place their needs in the forefront, to augment value for
them. This theory (stakeholder) rather argues that employees, customers, government/regulators
are equally important. It sometimes regards competitors as stakeholders as their status are
derivable from capacity to affect CBA and stakeholders. Thus, the stakeholder theory views
strategy as that which integrates both resource-oriented perception and a market-oriented
perception, and plugs a socio-political level (Mei and Zhou 2015).
The normative theory of stakeholder identification is an a familiar version of
stakeholder theory that pursues to define particular stakeholders of the Bank and moves a step
further to undertake the examination of condition upon which management treats such parties as
stakeholder also called the descriptive theory of stakeholder silence. The stakeholder theory has
succeeded in business ethics as CSR framework method. The analysis of stakeholders has
complemented issues approaches by bank management for the examination of societal,
individual and organizational dilemmas (Shapiro and Stefkovich 2016). For example, whereas
the management may prioritize better profits hence charging higher rates, customers prefer better
quality but at affordable rates of interest (Ferrell and Fraedrich 2015). Thus by applying
normative theory of stakeholder identification, the bank will understand the behavior of each
stakeholder and address it accordingly to create a win-win situation. Also, the management will
use descriptive theory of stakeholder silence aspect of stakeholder theory to come up with the
best condition to treat all parties identified in the normative theory of stakeholder identification
as stakeholders.

Ethics and Financial Services 6
Part C: Commonwealth Bank-Recommendations
MEMO
To: CBA’s Board of Directors
From: (Write your name)
Cc: CEO
Date 12th January 2018
Subject: Recommendations to Three Areas of Change Priorities
I have successfully completed the analysis of the key priorities areas for change management to
help repair the reputation of the Bank and restore the bank’s trust amongst its stakeholders.
Having finished the preliminary research and subsequently identified 5 feasible areas for
remedial action including the board, management, HR department, employees and overal culture
and having listened to your view of effects of implementing all the five corrective actions, I have
henceforth narrowed down to three inevitable areas of highest priority including board,
employees and management to present recommendations. I believe that effecting these changes
will take the Bank a long way towards repairing its reputation and restoring trust amongst its
stakeholders.
Purpose:
The purpose of this memo is to inform the CBA’s Board of the three key areas of highest priority
that must be changed to restore trust and repair the image of the bank. It will purposes to
highlight the rationale for the highest priority areas and the rationale why focusing on such area
contribute most to the repair of CBA’s reputation, and restoring trust in the CBA. Moreover, one
or more recommendation that serves the objective of repairing the Bank’s image, and restoring
trust in the CBA is presented based on a descriptive model of ethical decision-making.

Ethics and Financial Services 7
Description of Investigation/Analysis
To identify the three key areas of priorities and present rationale for my choices, I undertook a
critical evaluation and review of the case presented about the CBA’s stakeholder analysis. This
was motivated by the fact that banks had long been controversial in Australia society based on
the debate the government need to initiate a Royal Commission into the industry practices. The
realization that CBA had been the most controversial lately inspired my investigations into its
stakeholder analysis. For this reason, I probed its financial planning, comminsure, AUSTRAC
scandal, CEO resignation and senior executive pay and the class action.
Findings
From my evaluation above, the board in regards to key changes to banks corporate
governance, management in regards to Board’ Strategy implantation and employees in regards to
professional behavior towards customers and colleagues stood erected as the three key areas of
highest priority to effect change to help repair and restore image and trust into CBA respectively.
#1Rationale: Board: As has been highlighted, the board must be changed in terms of
corporate governance. I realized from my evaluation that there is laxity in corporate governance
in CBA. This is why the bank has remained the most controversial in the banking industry and
hence losing its reputation and trust (Ashwin 2015). This was supported by the fact that CBA has
remained embroiled in a scandal that involved forged signatures alongside dodgy financial
planning which caused the CEO to apologize because it was hurting the business reputation and
trust (Serhan, Mikhael and El 2016). Moreover, the bad corporate governance has seen the
CommInsure use unscrupulous practices buried in the fine print conditions of its contracts to
deny, delay as well as avoid paying claims. This has served to pit the bank against its customers
hence making it lose its image and trust.

Ethics and Financial Services 8
#2Rationale: Management in regards to Board’ Strategy implementation is a key area of
priority that must be changed. The rationale for choosing management is that because there will
be changes in the corporate governance strategies and policies by the board, it is the management
that will have to implement these policies and strategies. However, as it is currently constituted,
it seems impossible for the management to undertake effective implementation. This is supported
by the fact that laxity in management has led to the loss of reputation and trust in the company as
the bank is seen as the most scandalous and controversial (Uyan-Atay 2014). For example, there
has been a civil proceeding that the CBA has been complicit in money laundering. This blame is
squarely with the management who must see to it that the policies and strategies to prevent
money laundering is implemented. For this reason, many Australians have lost trust in the bank
as they are much vulnerable to crime as well as terrorism funded directly via the CBA’s banking
system. This is because, the management have breached the Anti-Money Laundering and
Counter-Terrorism Financing Act (2003) 53,000 times beginning year 2012. We can’t solely
blame the directors on this because it is the management that does the implementation of such
regulation and Acts on a daily basis thus failing to report transactions or do them too late.
#3: Employees in regards to professional behavior towards customers and colleagues is
another key area of priority for change. As observed above, the employees are the daily drivers
of the bank. However, they failed to report the money laundering transactions in time for action
which caused the bank to lose its reputation and trust. For this reason, a class action has been
filled that has not only caused the bank its name and trust, but has caused investors massive
losses due to lawsuits effects on share prices. Thus, by having employees to work professionally
towards customers, they will be able to put the interest of the customer first and hence would bar
the scandals hence restoring the trust and image of the bank. Moreover, where the employees act

Ethics and Financial Services 9
professionally towards their colleagues, they will be able to work as a team for the benefit of the
bank and its stakeholders hence efficiency in the bank (Hartono et al. 2014).
Recommendations
#1: To repair the reputation and restore trust in CBA the board must come up with corporate
governance policies and strategies that ethically promotes the early disclosure and report of
suspicions transactions of money laundering (Bannister and Connolly 2015).
#2: To repair image and restore trust in the bank, the management should be changed in terms of
Board’ Strategy implementation by having follow ups strategy that ensures that management
completely implements strategies and recommends the areas for improvement to the board.
#3: In terms of employees in regards to professional behavior towards customers and colleagues,
the management must ensure that each stakeholder is identified and their needs addressed based
on professional codes of conducts and that customers and colleagues have clear framework of
reporting any violation or ethical conducts of employees for action (Usman 2014).
PART C: Letter of Acceptance
Name of the Student,
Address,

Ethics and Financial Services 10
Australia,
Date
To: The Manager,
Commonwealth Bank of Australia,
Cc Human Resources,
Address,
Australia,
Date.
RE: ARCCEPTANCE OF THE GRADUATE ROLE WITH CBA
Following the offer which I received to work as a graduate role with the commonwealth
Bank of Australia, I would like to accept the opportunity as this will help me gain the necessary
skills and knowledge in understanding the actual work process within the organization. I made
the ethical decision based on my values and perspectives and then comparing it with that of the
institution.
The Australian banking industry is one of the best organizations as it promotes the
employees and thereby enables them to develop their careers hence promoting their living stand.
The various services put in place by the management and board of directors will enable me gain
and have a good understanding of the work process. And as a fresh graduate young in the
industry I would not hesitate to miss the opportunity.
Your organization is well known in the industry as it understand issues dealing with
banking services and as a graduate with the knowledge in banking, the organization will also

Ethics and Financial Services 11
benefits from my understanding of the process as I will try to work as team to meet the
organization goals.
Lastly, I would like to appreciate and give thanks to the entire organization for the chance
offered by the organization. I take the opportunity and ready to work towards the success of its
goals.
Yours Faithfully
Sign:
Full Name:

Ethics and Financial Services 12
References
Ashwin, V.A., 2015. The relationship between corporate governance and financial performance
of companies listed on the JSE Ltd (Doctoral dissertation, University of Johannesburg).
Bannister, F. and Connolly, R., 2015. The great theory hunt: Does e-government really have a
problem?. Government Information Quarterly, 32(1), pp.1-11.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson
Education.
Hartono, B., Sulistyo, S.R., Praftiwi, P.P. and Hasmoro, D., 2014. Project risk: Theoretical
concepts and stakeholders' perspectives. International Journal of Project Management, 32(3),
pp.400-411.
Kocet, M.M. and Herlihy, B.J., 2014. Addressing value‐based conflicts within the counseling
relationship: A decision‐making model. Journal of Counseling & Development, 92(2), pp.180-
186.
Lehnert, K., Park, Y.H. and Singh, N., 2015. Research note and review of the empirical ethical
decision-making literature: Boundary conditions and extensions. Journal of Business
Ethics, 129(1), pp.195-219.
Mei, D. and Zhou, L., 2015. Anti-Money Laundering Game between Banking Institutions and
Employees in the Progressing CNY Internationalization. Modern Economy, 6(04), p.490.
Serhan, C., Mikhael, S. and El Warrak, S., 2016. Anti-Money Laundering Rules and the Future
of Banking Secrecy Laws: Evidence from Lebanon. International Finance and Banking, 3(2),
p.148.
Shapiro, J.P. and Stefkovich, J.A., 2016. Ethical leadership and decision making in education:
Applying theoretical perspectives to complex dilemmas. Routledge.