Westpac shares ended higher for the first time in five days yesterday in the wake of the dramatic changes at the top of the country’s second-largest bank.
The shares rose 1.4% to $24.90 at the close (but down a touch from a 2% gain during trading) as investors gave the thumbs up to the news that chairman Lindsay Maxsted, CEO Brian Hartzer and senior director, Ewan Crouch are exiting.
Hartzer leaves this Friday, Maxstead has brought forward his departure to the first half of 2020 from next year’s AGM and Crouch will step down at the December 12 annual meeting.
Mr. Hartzer will be paid one year’s base salary in lieu of service or $2.68 million.
Interim CEO Peter King, who is the bank’s chief financial officer and due to retire shortly says he will stay on and take the reins from next Monday.
He and Lindsay Maxstead held a conference call yesterday to try and reassure investors, media and the market that Westpac was under control.
On that call, King said he would stay in the role for as long as “the board needs me” and did not rule out the possibility of becoming the bank’s permanent top boss.
“I am completely committed to this role and I haven’t made a decision to the future,” he said. “I’ve got a lot of work to do….the stability of the bank is very important.”
Mr King said he was “horrified” by the regulator’s statement of claim.
Leading bank analyst Brian Johnson from financial group Jeffries said on the same call that he was “not entirely surprised” by the news of Mr. Hartzer’s resignation.
“I think you would have had to have been blind not to expect this would happen.”
“The longer this was prolonged, the more the Westpac brand would be damaged, the bigger the quantum fine and the more the political debate runs to be very anti-Westpac and the more regulators get involved.”
“The longer this went on the more damaging it was for shareholders.”
Researcher at shareholder advisory service ISS, Vas Kolesnikoff he was not surprised by chief executive Brian Hartzer’s resignation and that it was “just a matter of time” before heads at Westpac started to roll.
“The market wasn’t going to let this go,’’ he said in an online story on the Fairfax Media website.
“There is a higher standard applying to banks now and they need to be aware of that. There isn’t much sympathy for bankers, you just can’t just do what you want and expect the gravy train to keep rolling.”
