The Commonwealth Bank of Australia (CBA) has become the first major Australian busiess to cut executive pay packets to safeguard itself from the global financial crisis.

The move has come in for commendation from commentators who have termed the CBA action prudent and said the Norris and CBA were reminding that the best leaders lead by example.

So far, many of Australia's top companies including AMP, Qantas, Virgin Blue have only frozen executive salaries.

The bank's chief executive, Ralph Norris, announced he would take a 10-per cent cut in his A$3.122 million base salary, while an across the board pay freeze takes effect from 1 July.

The change means Norris will take home A$8.35 million instead of A$8.662million including bonus and superannuation. The move comes in the wake of CBA and its rivals refusing to pass on the Australian Reserve Bank's April interest rate cut last week to customers.

The bank's board will cut 10 per cent off its fees with its top 10 executives taking 5 per cent less in wages.

The move by CBA is designed to stall the bank regulator, the Australian Prudential Regulation Authority taking tough action in line with its soon to be released pay principles for banks that is likely to suggest a stringent line on pay. Such measures have been initiated by many members of G20.

Norris said though the Australian economy and banking industry had weathered the economic downturn better than most countries, it would still not be immune to the global economic pressures.

He said in a memo to the staff that while the CBA is one of the strongest of banks globally, it will still be impacted by the economic turmoil which would hit business volumes and debt expenses eroding profitability.

While typically organisations in such situations resort to downsizing for short term results, it leaves organizations significantly under-resourced to inevitable recovery, he said.

He said the wage cuts, effective 1 July, are designed to preserve jobs and tailor expenses in a weaker economy.

With the cuts bank staff earning under A$100,000 a year will receive a 1.5 per cent pay rise in July instead of the norm 4 per cent a year they have been receiving over the last four years.

The bank's move comes as prime minister Kevin Rudd and treasurer Wayne Swan have called on company executives to show restraint with their salaries.

Former Commonwealth Bank chief David Murray, who is now the Future Fund chairman had also voice severe criticism of bankers' salaries.