Foundation (1911–1919) The Commonwealth Bank of Australia was established by the
Commonwealth Bank Act 1911, introduced by the
Andrew Fisher Labor government, which favoured bank
nationalisation, with effect on 22 December 1911. In a rare move for the time, the bank was to have both savings and general bank business. The bank was also the first bank in Australia to receive a federal government guarantee. The bank's earliest and most strenuous proponent was the flamboyant American-Australian Labor politician
King O'Malley, and its first governor was Sir
Denison Miller. The bank opened its first branch in
Melbourne on 15 July 1912. In an agreement with
Australia Post that exists to this day, the bank also traded through post office agencies. In 1912, it took over the State Savings Bank of Tasmania, and by 1913 it had branches in all six states. In 1916, the bank moved its head office to
Sydney. It also followed the Australian army into
New Guinea, where it opened a branch in
Rabaul and agencies elsewhere.
Central bank (1920–1959) (1916-1960) In 1920, the bank began acquiring
central bank powers when it took over the responsibility for the issue of Australian bank notes from the Department of the Treasury. Also in 1920, the Commonwealth Bank took over the
Queensland Government Savings Bank. In 1924, the federal government of
Stanley Bruce sought to place further checks and limits on the powers of the governor of the bank, and passed the
Commonwealth Bank Act, 1924, which created a seven-member Board of Directors comprising the governor, the Secretary of the Treasury, and six directors "actively engaged in agriculture, commerce, finance or industry", and a Chairman of the Board elected annual from its members. The first six board members were appointed on 10 October 1924: Sir John Garvan,
Sir Robert Gibson,
Sir Samuel Hordern, Robert McComas, Richard Samuel Drummond and John McKenzie Lees. Garvan was appointed as the first chairman on 13 October 1924. In 1931, the bank board came into conflict with the
Labor government of
James Scullin. The bank's chairman Sir Robert Gibson refused to expand credit in response to the
Great Depression, as had been proposed by Treasurer
Edward Theodore unless the government cut pensions, which Scullin refused to do. The conflict surrounding this issue led to the fall of the government, and to demands from Labor for reform of the bank and more direct government control over monetary policy. Also in 1931, it took over the savings bank business of the Government Savings Bank of New South Wales (est. 1871), the current account and fixed deposit business of the NSW Rural Bank Department, and the State Savings Bank of Western Australia (est. 1863). In 1942, the Commonwealth Banking Corporation (CBC) suspended its operations in
Papua New Guinea as the
Imperial Japanese Army captured many of the towns in which it operated, and bombed
Port Moresby. The bank resumed operations later, possibly in 1944. The bank had many branches across Papua New Guinea including Port Moresby, Boroko, Rabaul, Lae, Wau, Bulolo, Goroka, Kavieng, Madang, Mount Hagen, Kundiawa, Popondetta and Wewak. On Bougainville, there was Kieta, Panguna, Arawa and early on a part-time sub-branch at Loloho. It maintained those facilities to support trade, local business, government and small savers. The Commonwealth Bank received almost all central bank powers in emergency legislation passed during
World War II and at the end of the war, it used this power to begin a dramatic expansion of the economy. This was also the aim of the federal government at the time, which attempted to compel the Australian states to conduct their banking with the Commonwealth under the
Banking Act 1945 (Cth), but the High Court in
Melbourne Corporation v Commonwealth (1947) 74 CLR 31, blocked this move. In August 1945, the federal government of
Ben Chifley passed the
Commonwealth Bank Act, 1945, which repealed the 1925 act and abolished the Board of Directors, returning full executive control of the bank to the governor. The government also dramatically expanded immigration programs. In response, the bank established a Migrant Information Service (later known as the Australian Financial & Migrant Information Service, or AFMIS). The bank expanded during this period, and in just five years it opened hundreds of branches throughout Australia and in 1951 it established a branch in the
Solomon Islands. In 1958 and 1959, there was a controversy concerning the dual functions of the organization, operating as the central bank on the one hand and a commercial bank on the other. As a result, the government separated the two roles, creating the
Reserve Bank of Australia to exercise the central bank function, and leaving the Commonwealth Banking Corporation to operate purely as a commercial bank. Those commercial functions were exercised by the organization's constituent sections: the Commonwealth Trading Bank of Australia, the Commonwealth Savings Bank of Australia, and the newly formed Commonwealth Development Bank. From 1958 to 1976 the Commonwealth Bank operated savings bank agencies in the
New Hebrides.
Diversification (1960–1991) A new Commonwealth Development Bank was established in 1960 and during the 1970s the bank diversified its business into areas like insurance and travel. It established a finance company, CBFC in 1974. The bank also became more heavily involved in foreign currency trading and international banking in general. The bank actively supported the introduction of
decimal currency in the years leading up to 1966 and, like most banks, it gradually converted its paper records onto a new computer-based system. The bank created the first
credit card in Australia in 1974 when it established
Bankcard. In later years the bank began offering
MasterCard (1984) and
Visa (1993) cards as well. In 1974, as
Papua New Guinea approached independence, the bank formally handed over its PNG operations to the newly created and government-owned
Papua New Guinea Banking Corporation (PNGBC). The bank retained a restricted branch in Port Moresby that it finally closed in 1982. In 1981 the bank transferred its operations in the
Solomon Islands to the
National Bank of Solomon Islands, which operated as a joint venture (51% Commonwealth Bank, 49% Government of the Solomon Islands). In 1989 the bank acquired 75 per cent of
ASB Bank in
New Zealand. In 1991 the bank acquired the failing state government-owned
State Bank of Victoria.
Privatisation (1991–present) ; the Commonwealth Bank's headquarters from 1990 to 2009 Between 1991 and 1996 the Australian government under the leadership of prime minister
Paul Keating fully privatised the Commonwealth Bank. The first share offer in 1991 was valued at $1,292million, the second in 1993 for $1.7billion and the third was sold for $5 billion in 1996. It is a public company, but one of the few such companies in Australia whose official name does not end in 'Limited'. In 1994 Commonwealth sold its shares in
National Bank of Solomon Islands to
Bank of Hawaii. In 1994, Commonwealth took a 50% share in PT Bank International Indonesia. On 10 March 2000, the Commonwealth Bank and Colonial Limited announced their intention to merge, with seven Commonwealth Bank shares being offered for twenty Colonial Shares. The merger received final approval from the Supreme Court of Victoria on 31 May 2000 and was completed on 13 June 2000. This brought into the fold Colonial's stake in
Colonial National Bank, the former National Bank of Fiji. The bank also acquired the remaining 25% of
ASB Bank. Asian banking opportunities in 2000, saw the bank acquire full ownership of PT Bank International Indonesia and rename it (PT Bank Commonwealth). This bank now has over 16 branches and has opened several FX shops to cater to Commonwealth Bank clients who are tourists in
Bali. In 2005, the bank established strategic co-operation agreements with two Chinese banks, Jinan City Commercial Bank and
Hangzhou City Commercial Bank; it took an 11% stake in Jinan Commercial, and a 19.9% stake in Hangzhou Commercial. Commonwealth also established a representative office in
Bangalore,
India. On 27 January 2006, the bank acquired the remaining 49% stake in Colonial National Bank (Fiji). with
Aussie Home Loans, purchased
Wizard Home Loans. As part of the deal, the Commonwealth Bank will acquire Wizard mortgages up to the value of A$4 billion. Commonwealth Bank held about 30 per cent of the loan business of financial advisory company
Storm Financial when it collapsed in January 2009. In December 2009, Commonwealth sold
Colonial National Bank to
Bank of South Pacific. The bank transferred its
ATM service desk from
HP Enterprise Services in
Adelaide to ITS (
Armaguard) in
Sydney in March 2012. The bank will change from
NCR and
Diebold ATMs to
Wincor Nixdorf ATMs over the coming years. The bank is the only financial services organisation to appear in the Dream Employers' top 20 list of preferred employers for 2010 and 2011. During the
Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry it was discovered that the Commonwealth Bank had charged dead people for financial advice services. On 9 May 2018, Commonwealth Bank settled an interest rate rigging case brought by
ASIC for $25 million. In the settlement, the bank admitted it engaged in "unconscionable conduct" and manipulated the bank bill swap rate five times between February and June 2012. On 16 November 2023, the bank announced divestment of PT Bank Commonwealth to
Bank OCBC NISP. ==Controversies==