ANZ Extends Salary Cap

ANZ has announced that the company will continue to implement a cap on executives’ salaries to manage its financial resources and adapt to bank slowdown.

The squeeze in domestic borrowing and pay scrutiny has put the pressure on Australian banks.

Industry sources said ANZ’s decision to extend the cap is to keep pace with Commonwealth Bank’s similar move. Other big companies have also implemented the same cap like Rio Tinto and BHP.

According to ANZ chief executive officer Mike Smith, senior executives should understand that managing costs is a concern for everyone. By agreeing to the salary cap, senior executives demonstrate that they take this concept to heart.

Smith also said that he and many other ANZ executives would follow the salary cap for the rest of the year and 2013.

It was October 2011 when ANZ froze the salaries of its executives. About 900 of its top earners agreed to the freeze, understanding that weak conditions have affected the banking industry. Smith received more than $10 million last year.

The ANZ chief said he understands that there might be a backlash against the industry amid the controversies like bailouts, regulatory breaches, among others. He conceded that banks in general are facing reputational challenges and he expects that these may also affects banks in Australia.

In a bit of good news, ANZ said it reached a $1.53 billion third-quarter profit. The figure is nine percent higher compared to last year’s. The company also expects to achieve $6 billion full-year profit.

Smith said the bank continues to balance funding and competitive pressures.