Following on from the damning AUSTRAC scandal surrounding Westpac and growing concern over a perceived lack of inaction, the group chief executive officer Brian Hartzer will be stepping down as CEO, with current CFO Peter King taking over as acting CEO, effective from 2 December.
In a short statement, Mr Hartzer said: “As CEO, I accept that I am ultimately accountable for everything that happens at the bank. And it is clear that we have fallen well short of what the community expects of us and we expect of ourselves.”
The chairman of the board, Lindsay Maxsted, also announced that he will bring forward his retirement as chairman to the first half of 2020. This will enable the board to seek a new CEO under a new chairperson.
Mr Maxsted also asked long-standing director, Ewen Crouch, not to seek re-election at the upcoming AGM.
Current chief operating officer Gary Thursby will act as CFO.
‘Board accepts the gravity of the issues raised’
“The board accepts the gravity of the issues raised by AUSTRAC,” Mr Maxsted said.
“As was appropriate, we sought feedback from all our stakeholders, including shareholders, and having done, so it became clear that board and management changes were in the best interest of the bank.”
Mr Maxsted thanked Mr Hartzer for his service, adding: “Brian leaves the bank with a strong balance sheet, with each of our businesses number one or two in their markets.”
Noting the change of CEO, Mr Maxsted said: “Peter King has been appointed acting CEO until a global search process for a new CEO is completed.
“Peter has had a long and distinguished career at Westpac and has been the CFO since 2014. He is the right choice to provide stability and direction to the bank and its people.
“He is an executive of exceptional integrity who is deeply respected by the market and the entire Westpac team.”
He continued: “The board has asked Peter to focus on two immediate priorities: to implement the Westpac Response Plan and to continue to execute the group’s broader strategy.
“We are determined to urgently fix these issues and lift our standards to ensure our anti-money laundering and other financial crime prevention processes are industry-leading.
“We are currently working through our response to the Statement of Claim and will shortly commence the independent review. The board will continue to provide updates on these issues.”
Mr Maxsted said he would also like to acknowledge and thank Ewen Crouch for his “integrity and substantial contribution” during his six and a half years as a director of Westpac.
“Ewen’s extensive legal experience and commercial knowledge has been invaluable to the board.”
Incoming acting CEO Peter King said: “I am honoured to be appointed to this role. I understand the responsibility of this position and the importance of Westpac both as an institution and Australia’s oldest bank. I am committed to helping address the current issues and restore the reputation of the bank.”
Last week, Australia’s anti money-laundering and terrorism financing regulator, AUSTRAC, revealed that it was seeking civil penalty orders against the big four bank over 23 million alleged breaches of anti-money laundering laws.
According to AUSTRAC, the bank failed to appropriately monitor outgoing international funds transfer instructions (IFTIs) of customers, including those which it alleges are “consistent with child exploitation typologies”.
One of the more damning examples in AUSTRAC’s Statement of Claim are the assertions that one such customer transferred money to a person located in the Philippines who was later arrested in November 2015 for child trafficking and child exploitation involving live streaming of child sex shows.
The bank has now released a response plan to the AUSTRAC issues and work is ongoing to identify accountability and bolster its AML/CTF work.
[Related: Westpac execs to lose bonuses: Is it enough?]
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.