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

sdf

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

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Bank Shares

Could the growth of Kiwibank impact ANZ shares?

Could a competitor hurt ANZ’s outlook?

Read more »

Shocked office worker staring at computer screen with colleagues working in the background.
Bank Shares

Why CBA shares could keep on rising

Can the ASX banking giant continue to defy analyst expectations?

Read more »

A man looking at his laptop and thinking.
Share Gainers

Thinking of selling your CBA shares? This expert says you should hold on

CBA shares are up by about 80% since November 2023.

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Bank Shares

The catalysts that could bring CBA shares back to earth

CBA is now the world's most expensive banking stock.

Read more »

A money jar filled with coins, indicating an investment return from an ASX dividend share
Bank Shares

Is the CBA share price a buy for passive dividend income?

CBA is one of the biggest dividend payers in Australia. Is it a good buy?

Read more »

a woman looks exhausted and overwhelmed as she slumps forward into her hand while looking at her laptop screen.
Bank Shares

What Microsoft's lost decade could mean for CBA shares

Could CBA shares be worth the same in 10 years time?

Read more »

Woman calculating dividends on calculator and working on a laptop.
Bank Shares

When does Macquarie expect Westpac to cut its dividend?

Here's the latest forecast for this banking giant's dividend.

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

When will CBA shares stop rising? CSL might give us a clue

CSL's history might tell us what's in store for CBA.

Read more »