More pain for Westpac and its shareholders and it is not going to change any time soon.
The shares lost another 1.3% yesterday to take the loss for the past four days to more than 8% and over $15% for the month.
That was after ASIC, the corporate watchdog took the surprising step to confirm publicly that it had started an investigation into possible breaches of law by the bank.
ASIC’s confirmation was taken to mean that it had started looking into possible breaches of laws it administers — a possible reference to the Corporations Act. A spokesman for the regulator would not say anymore.
The bank’s shares closed at $24.44, the lowest they have been for nearly a year and still well under the $25.32 issue price for the fundraising.
“ASIC can confirm that it commenced an investigation on Thursday, 21 November 2019 concerning possible breaches of legislation it administers arising from AUSTRAC’s actions in relation to Westpac,” a spokesman said on Monday.
As well, credit ratings Moody’s also warned the alleged money laundering breaches would be “credit negative” for the bank.
Moody’s warning was issued late last week and included in the start of the week list of corporate moves and their impact on the company or government ratings.
Moody’s said the fallout from the AUSTRAC claims of 23 million separate examples of money laundering breaches was credit negative for the bank’s Aa3 rating.
“The allegations are credit negative because of the damage to the bank’s reputation and the adverse financial impact from potential fines and costs related to remedial actions,” vice president Daniel Yu wrote in a note to clients.
“Compliance problems of this nature also highlight the corporate governance challenges of maintaining tight controls at large and complex institutions, and the negative spillover effects for the banks’ reputations.”
Bloomberg reckons Westpac has $35 billion of debt maturing in 2020 that needs to be refinanced with a further $20 billion a year in 221 to 2023.
Westpac also warned in a statement to the ASX that its costs will be $80 million higher this financial year, due to the package of measures it announced on Sunday in response to a money laundering compliance crisis
With chairman Lindsay Maxsted meeting key investors and proxy advisers this week, the bank said pre-tax expenses would be $80 million higher, and the costs would come out of its cash earnings as “notable items.”
Changes announced on Sunday included enhanced transaction monitoring and extra spending on technology and staff to combat financial crime.
