The Commonwealth Bank board has slashed the pay of its senior executives as it goes into damage control to fight billions in fines and a potential royal commission.

A day before the release of the company’s full-year profit results, CBA chairwoman Catherine Livingstone announced the short-term variable bonuses of CEO Ian Narev and all senior executives will be cut “to zero” for 2016-17, while non-executive directors will lose 20 per cent of their fees for 2017-18.

Mr Narev’s total remuneration for 2016 was $12.3 million, $2.8 million of which was in bonuses.

In the 2016 financial year, all of the directors who served the full year were paid more than $300,000, meaning a $60,000 pay cut for directors.

The then-CBA chairman David Turner was paid $874,000.

In announcing the decision, Ms Livingstone acknowledged to the stock exchange that the bank was facing “risk and reputation matters” amid the fallout from more than 53,000 alleged money laundering breaches.

Ms Livingstone said the Board had made its decision considering “the collective accountability of senior management for the overall reputation of the Group”.

“The Board also recognised that it has shared accountability and therefore has decided to reduce Non-Executive Director fees by 20 per cent in the current 2018 financial year.”

The statement did not specify how much money would be cut.

But Ms Livingstone insisted her CEO, Mr Narev, retained the board’s “full confidence”.

The AUSTRAC case in the Federal Court against the bank is being seen as poor timing, given CBA will announce a multi-billion dollar profit on Wednesday.

The board’s attempt to reduce reputation risk followed renewed pressure from federal politicians on all sides for a royal commission into the banking sector.

On Tuesday, Labor leader Bill Shorten made his strongest comments yet on the scandal, accusing the bank of appearing to be “operating in a pretty loose fashion”.

“The one thing you can set your clock by is a problem in the banks, can’t you? It comes around time and time again,” he told a media conference.

“You had the CEO of the Commonwealth Bank telling Labor that we should go back in our box, know our place and don’t have a royal commission, and in the meantime his own operation seem to be operating in a pretty loose fashion, don’t they?

“So again, you want to fix the banks? Have a royal commission. Labor will have a royal commission.”

Senator Nick Xenophon accused the bank of a “pretty woeful” response to the allegations.

“[CBA] need to take this seriously. I don’t think they have,” he told the ABC.

The senator is calling for an amendment to the law to allow executives and directors to be held criminally liable for similar breaches to those alleged against CBA.

“If it can be shown that an organisation didn’t do everything possible, have measures and risk controls to prevent this sort of offence from occurring, then the directors and senior executives of a corporation ought to be liable,” he said.

“The buck stops with the CEO and the board of directors. The sort of spin that Mr Narev has given in the last 24 hours has been pretty woeful.”