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CBA boss Ian Narev might want to reach for the blender to explain rate strategy

Perhaps Westpac CEO Gail Kelly could give CBA’s Ian Narev some advice. Photo: Rob Homer John Borghetti adopts a protective stance against the armpit sniffers of new shareholder, Hainan Airlines. Photo: Ben Rushton
Nanjing Night Net

Poor Commonwealth Bank boss Ian Narev​ will be really earning his millions this week.

He will be the first of the Big Four bank CEOs to have to face the press after last week’s ruckus when he announces CBA’s earnings results this Wednesday.

This means he will be the first bank CEO to have to face public scrutiny about its decision to barely pass on half of the Reserve Bank’s interest rate cut.

He might be wondering how to explain the complexities of our banking sector’s reliance on global bank financing, not just local deposits, which mutes the impact of the RBA cut on its overall funding.

And then he has to ensure this does not take the gloss off the record $9.5 billion profit he is expected to unveil.

It’s enough to drive you bananas.

Luckily, the big banks have been here before.

Remember Gail Kelly’s Westpac in 2009? It took a very novel approach to explaining to customers why it raised its mortgage interest rate by 0.45 per cent – nearly double the RBA increase of 0.25 per cent.

The bank drew inspiration from one of the cyclones which knocked out most of Australia’s banana crop a few years earlier and created a short video on how the price of smoothies rose as a result of the subsequent soaring cost of bananas.

“In some ways a bank is really just like a company that sells banana smoothies. A bank is a business that buys and sells something … only in this case that something is money,” said the video which was sent out to hundreds of thousands of Westpac customers.

“We are trying to use a visible example of bananas and how their price was affected by the cyclone in Queensland [in March 2006] to explain a complex issue. Our intentions were honourable and we thought it a useful tool,” said a company spokesman after the video created a freak storm of its own.

It isn’t too late for the CBA army to think up something a little more contemporary for Narev this Wednesday. Heavy baggage

Virgin Australia’s newly installed chairman, Elizabeth Bryan, is leading from the front when it comes to financing the massive capital raising the airline is currently undertaking.

She picked up all of her entitlements and doubled her stake to 227,044 shares last week, as did former National Party leader, Mark Vaile, who is now the proud owner of 60,000 shares in our non-iconic airline.

It was a little bit harder for chief executive John “Massimo” Borghetti​, to match their red-blooded commitment.

He owns 8.9 million Virgin shares so taking up of all of his share entitlements would have set him back a cool $1.87 million. That’s a lot of frequent-flyer points.

CBD thought he did very well to take up 470,000 shares – which means his latest share acquisition easily exceeds the combined stakes of Bryan and Vaile.

Virgin also proudly pointed out that he has never sold a share.

And given that the share price has more than halved this year alone, we can safely assume Borghetti is happy to keep this record intact for the forseeable future. Rolled gold 

A lot happened during CBD’s break, but it is hard to go past the continuing Thai adventures of Kingsgate Consolidated.

In its update late last week, the company reported that it is facing write-downs totalling $US175 million ($229.7m) against its Chatree gold mine, which is being shut down by the local government.

“The Thai government’s actions lack legal and operating clarity,” said the release, which would have gone down a treat with the Thai locals.

Nothing to worry though. “Kingsgate has a bright future in Chile being a jurisdiction that welcomes and respects foreign investment,” it said.

The bad news is, Chatree is the company’s only mining operation. Its Chile operation currently consists of some very detailed plans and good intentions.

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This story Administrator ready to work first appeared on Nanjing Night Net.

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