Another week ahead, more meetings and more pressure on Westpac, its CEO, Brian Hartzer, chair, Lindsay Maxstead, and other directors after Friday’s emergency board meeting and statement failed to convince investors and critics that the bank has a handle on handling the sensational AUSTRAC money laundering allegations.
Westpac shares closed down 1.5% on Friday at $24.17, the lowest the shares have been since early February and took the week’s losses to 7% and more than 14.7% in the past month.
The slide in the past month is well over $14 billion and the loss since Wednesday is around half that or more than $7 billion so the relaxed attitude (still) is a load of old tosh. The cost to shareholders from the AUSTRAC claims which were alluded to by the bank in self-reporting them earlier in the year), is substantial.
NAB (which is the next bank to find out from AUSTRAC what the agency says about self-reported problems) shares have fallen as well – down 4.9% last week and 10% in the last month.
Commonwealth Bank shares fell 1.3% last week (it has already been through its AUSTRAC scandal) and 1.36% in the past month. ANZ shares are down 2.1% in the past week and 11.3% in the last month.
Big investors are reportedly looking at Westpac’s disclosures ahead of its $2 billion capital raising earlier this month and wondering whether to launch legal action over what some might claim are inadequate disclosure.
The bank is asking retail shareholders to chip in another $500 million as part of the $2.5 billion raising by the close of business next Monday. Will they ignore this appalling news and chase the high dividend yield (well above 7% before franking) and stump up the money?
Westpac has its AGM on December 12 which was already looking tough for the board. Now it looks like a slugfest in the making. And Westpac has a meeting later today with a key proxy advisory service which will be highly influential in how the vote goes at the AGM.
Friday’s statement from Westpac and chairman Lindsay Maxsted was long on words, but short on action.
The chairman apologised “unreservedly” for the bank’s mass breach (23 million times) of anti-money laundering laws and backed CEO Brian Hartzer.
In the statement, Mr. Maxtead said the bank’s board was “devastated” by the issues raised in a bombshell lawsuit from a regulator this week.
Not only did AUSTRAC accuse the bank of 23 million breaches it also alleged Westpac failed to adequately vet thousands of transactions that could be linked to child exploitation in the Philippines and other parts of south-east Asia.
“The notion that any child has been hurt as a result of any failings by Westpac is deeply distressing and we are truly sorry. The board unreservedly apologises,” Mr. Maxsted said.
“Our board, CEO and management team are fully committed to fixing these issues and we are taking all steps necessary to urgently close any remaining gaps and fix our policies and procedures so that this can never happen again.”
Mr. Maxsted claimed the bank had “taken action” on all of the customers identified by AUSTRAC and established a review, which included making improvements to its anti-money laundering and counter-terrorism financing (AML/CTF) systems.“This review includes accelerating our ongoing program of AML/CTF improvements and we will provide public updates on our progress,” he said.
“We will take actions emerging from that review. An assessment of suitably qualified candidates to lead that review is underway.”
He said the bank had started talking with community groups about whether there were further steps it could take to fight child exploitation.
“We are continuing to work closely with AUSTRAC to accelerate resolution of the matter,” Mr. Maxsted said. “The board will provide an update in the coming days to share more information on what has occurred and what steps we are taking.”
But as we saw with the rapid changes at the top of the NAB earlier this year and the CBA in the wake of its AUSTRAC scandal, a week can be a long time in banking.
