Conflicts of Interest Policy 

Frequency of reporting

Research is published either regularly (daily, weekly etc) or as driven by events.The regular publications cover economics, credit, currencies, commodities and quantitative research. Most of these areas also have weekly overviews and monthly summaries.The event driven style dominates in equities although when important events happen, when rates change, or when data is released, the other research areas will often respond by producing a one-off piece of research.

Supervision of analysts
Equities analysts report to the General Manager Research, and quantitative analysts report to the General Manager Quantitative Research. These General Managers have responsibility for the work of analysts and are the final arbiters of editorial content. The Executive General Manager in charge of Global Markets makes final judgement on salaries, bonuses etc.

Sign-off procedures

Most research is signed-off by the head of the business unit producing the research and the senior researcher producing it. Changes to stock recommendations must be signed-off by the Investment Review Committee. This is a formally constituted body, involving senior research and compliance staff. The Committee cannot initiate recommendations. No member of the Bank outside the research teams is involved in reviewing draft research reports. Only members of the Research Team can determine the comments and information that is to be included in research reports.

Conflict of interest procedures

Potential conflicts of interest are controlled in a number of ways:

• No research staff report to client, trading or transactional areas as regards the determination of salary or bonuses, or in the content of their research;
• Where research staff assist product or transaction teams, this is controlled by Chinese-wall  procedures;
  Staff may not receive gifts or inducements;
• While staff can hold stock in the sector they cover, their trading is strictly controlled, and subject to specific restrictions whenever they are preparing research, or before company results presentations;
• The trading of all staff is subjected to a restricted list maintained by Compliance;
• Research is not circulated prior to release;
• We do not provide recommendations on our own company or its products;
• There are strict barriers to prevent analysts having access to non-public information.
• We declare when members of the CBA group own more than 5% of any company which is the subject of research.
• We declare when members of the CBA group have provided material non-research services to subject companies in the past two years.

Methodology of equities valuation

The valuation of equities involves significant data input combined with the judgement of the research team. Most teams produce a discounted cash flow model of the company concerned, consider price earnings ratios for comparable companies, and review a wide range of other standard metrics, which they combine with informed judgement to produce a final valuation.

Definitions used in making recommendations
We require our equities teams to form views as to the likely share price movement in the stock they are considering, for the next six months (for short run calls) and with a two year horizon (for long run calls). They then apply the rules below to arrive at their recommendations.

There are some occasions in which the rules are not applied mechanistically. These mainly arise when the analyst expects the share price to reach a certain level, but there are significant doubts arising (say) from the outcome of unusual event such as a legal case.

Interests in the Bank above 5%

As at 30 May 2008, there are no shareholders who owned more than 5% of the stocks in the Commonwealth Bank of Australia.

Structure of calls
As at 26 June 2008, the proportions of equity recommendations in each category are given below. We cover about 100 large cap stocks.

Mandates
The following table details the calls we have on entities in which the CBA Group had a lead or co-lead mandate during the 12 months to 26 June 2008.