Why the CBA share price could surge this morning

The Commonwealth Bank of Australia (ASX: CBA) share price could be on the move as ASIC dropped its investigations into AUSTRAC breaches.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Commonwealth Bank of Australia (ASX: CBA) share price is one to watch this morning after ASIC dropped a key investigation into the Aussie bank.

What did CBA announce?

CBA was notified that the Aussie corporate cop had dropped its investigation into the bank over its AUSTRAC scandal.

The proceedings, commenced by the Australian Transaction Reports and Analysis Centre (AUSTRAC) in August 2017, alleged money laundering breaches by the bank.

However, ASIC has concluded its investigations and will take no action against CBA or its directors.

That's good news for the CBA share price which could be on the move in early trade following the update late yesterday.

What does this mean for the CBA share price?

The AUSTRAC scandal has weighed on CBA for three years now and this latest update does provide some closure.

I think it's good news for the CBA share price with less uncertainty facing the bank and its shareholders.

On top of that, no penalties means investors aren't worried about the potentially huge liability hanging over future profits. The bank settled the AUSTRAC case for a record $700 million penalty in June 2018.

In turn, I would expect the CBA share price to climb higher in early trade barring any broader negative market factors.

It also is a big tick for the bank as it continues to fight a class action from shareholders.

A group of investors are seeking damages due to alleged failure to disclose material information. That includes allegations CommBank failed to inform shareholders it was potentially exposed to AUSTRAC enforcement action.

How has CBA performed in 2020?

It's been a rollercoaster of a year for the bank's investors. The CBA share price is down 12.8% in 2020 with even bigger falls seen among its big four bank peers.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 8.6% to 6,116.40 points.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

Man holding out Australian dollar notes, symbolising dividends.
Bank Shares

$10,000 invested in Westpac shares 12 months ago is now

Would you be smiling now if you invested in the big four bank a year ago? Let's see.

Read more »

a woman wearing the black and yellow corporate colours of a leading bank gazes out the window in thought as she holds a tablet in her hands.
Bank Shares

These 3 headwinds make CBA shares a sell: expert

This leading expert believes now is a good time to take profit on CBA shares. Let’s find out why.

Read more »

Happy young woman saving money in a piggy bank.
Bank Shares

Are ANZ shares still in the buy zone near 6-month highs

Bank stocks have rallied hard in 2024.

Read more »

Bank building in a financial district.
Bank Shares

Is this the $350 million reason the Big Four bank shares are falling today?

It’s another challenging day for banks.

Read more »

Young professional person providing advise to older couple.
Bank Shares

NAB shares sink on ASIC legal action

The banking giant failed 345 of its most vulnerable customers.

Read more »

Nervous customer in discussions at a bank.
Bank Shares

Is the NAB share price actually expensive?

Should investors be looking at NAB stock as a bargain?

Read more »

CBA share price represented by branch welcome sign
Bank Shares

Own CBA shares? Here's a major milestone you may have missed this week

CBA shares marked a groundbreaking achievement this week.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Bank Shares

Up 52% in a year! Is this rocketing ASX bank stock the perfect pick for my retirement portfolio?

Are CBA shares right for retirees?

Read more »