Commonwealth Bank directors gather tomorrow for their July board meeting. It’s going to be a bit busy, as Don BoredWalk reports.

It’s going to be a lengthy board meeting at the Commonwealth Bank tomorrow.

Not only will there be an update on the revamp of the retail services business that has already seen hundreds of millions of dollars spent, and hundreds of jobs lost, but there will also be discussion of the industrial dispute with bank staff, especially in the retail area.

That dispute is over pay, but has become meaner thanks to the sackings in the revamp of retailing. The Finance Sector Union has written to bank board members informing of further industrial action in different parts of the bank until August 11, when the bank is due to release its annual results.

That should go down like a lead balloon among CBA directors who are not known for their pro-union sympathies.The FCU had better not be holding its breath waiting for the board to call a truce and run up a white flag.

The board will also wonder about the advisability of comments last week from CEO, David Murray endorsing John Howard. The comments were reported in a small story in Thursday’s The Australian newspaper. Murray said Howard was the leader to trust with “our difficult decisions”.

Mr Murray’s comments had been made in a speech a week ago at the National Small Business Summit which had earlier been addressed by Howard.He reportedly praised the ‘risky decisions’ made by the Howard Government since 1996 that had enhanced our economic progress.Murray reportedly ended his speech by saying that he hoped the Prime Minister’s “enthusiasm was sustained”.

But a ‘comment’ by the reporter in the article was a bit naive. The reporter (Barclay Crawford) wrote that ” Mr Murray’s comments are a further blow to Mr Latham’s economic credibility, after the Business Council’s ongoing claims that the Labor Party will abolish Australian Workplace Agreements and increase the power of the Industrial Relations Commission.”

What blow? Its a long bow in any way to say that, but with The Australian and other News Ltd papers sniping at Latham at every opportunity, even the most juvenile of comments are allowed to slip through the filter.

What would probably be a little concerning to the CBA board would be the question, what if Latham wins? And if that happens, has the CEO’s comments the potential to do the bank and banking any damage.

The grandiose banking policy announced last month was just a bit of political theatre. An estimated $40 million cost a few hours profits for the big five banks as a whole, and the banking industry knows that.

And besides, isn’t it a bit rich for David Murray to take sides in the political debate. After all, it was the Labor Party that floated the Commonwealth, and a Labor-appointed board first up that selected Murray as CEO.

There’s the faint hint of someone biting the hand that promoted him all those years ago!

Other things to be noted for the board will be the comments from a number of analysts in the past three days wondering if the CBA’s aggressive price cutting in small business loans, and its bid to regain market share in housing mortgages, will have an impact on profit margins that have already been pressed by the huge cost of the revamp.

But perhaps the most important issue will be the amazing situation that’s happened in New Zealand where its subsidiary, the ASB has completely stuffed up an IPO.

Here’s how AAP reported it this morning.

“ASB Bank managing director Hugh Burrett has defended the bank’s actions in the failed StoreFund share float.

The bank owns 80 per cent of barbecue and spa pool retailer The BBQ Factory by default after underwriting the share offer.

Valued at $21.1 million, the retail chain would have been StoreFund’s first investment.Bank management were stung by some media coverage after StoreFund failed to list as scheduled on July 1.

In a message to staff, managing director Mr Burrett conceded it was “somewhat unusual” for the bank to be the owner of The BBQ Factory.Pressing on with the $30 million float was “untenable” because the very low demand for shares meant investors would have lost money when StoreFund listed, he said.

“In our view, the most ethical and appropriate course of action was to withdraw the float,” Mr Burrett said.

ASB Bank, the lead manager of the offer, and ASB Securities, the organising broker, have not disclosed the cost of pulling the float.Some of the $2.3 million of costs in the prospectus were not incurred because of the failure to float.But many were, including fixed costs for services such as accounting, auditing, legal work and advertising.

There is speculation that unwinding StoreFund’s management agreement with North Head Management, a company owned by Leigh Davis, Wayne Walden and Garry Bluett, brought extra costs.

The bank’s head of retail banking and marketing, Barbara Chapman, said The BBQ Factory would not be used in cross-promotions such as featuring barbecues or spa pools in bank marketing offers.

One reason: the bank will not be the long-term owner of the chain; the owner of the other 20 per cent is founder Roger Richwhite.”

How’s that for a stuff-up. A’ risky decision” to use Mr Murray’s words of praise about the Prime Minister, to describe the move by the CBA to become involved(indirectly) in promoting a float of a company.

Talk about dumb decisions. What will Murray do? He is not very tolerant of failure by subordinates.

And the reason why this is more than a little interesting inside the CBA is that the model for the revamp of the Australian retail banking operations, is the ASB.

The ASB is perhaps the best performing part of the CBA empire, and its also the best performed on the Australian bank arms in New Zealand.

Some banking analysts in Australia have wondered about the sense of basing the changes in the Australian bank on the ASB. They point out both economies are vastly different, especially retail banking.

Should be an interesting board meeting, the last before those results.