Westpac fears ‘dangerous’ board cull

Following on from the damning AUSTRAC scandal surrounding Westpac and growing concern over a perceived lack of inaction, Westpac announced yesterday that group chief executive officer Brian Hartzer would be stepping down as CEO, with current CFO Peter King taking over as acting CEO, effective from 2 December.

Westpac chairman Lindsay Maxsted also announced that he will bring forward his retirement to the first half of 2020, which he said would 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 in December.

Following the announcements, Mr Maxsted and newly appointed interim CEO Peter King hosted a media call to shed further light on the reshuffle. 

During the call, Mr Maxsted addressed reports of a push from investors for further board renewal as part of the bank’s response to the scandal.

Mr Maxsted said he feared that additional changes would go “too far” and inhibit the ban from delivering on its strategic objectives.

“I think that would be very dangerous, but I think investors will decide that,” he said.

“There’s a very fine balance here. [We] want to demonstrate to everyone that we very much understand accountability – both the board’s accountability on oversight and the CEO's accountability on management – hence the decisions we've taken. 

“But we don’t want to go too far so that it’s very disruptive to the business.”

The chairman said he is confident in the new team’s ability to manage the challenges ahead. 

“We think we’ve got the right balance, that’s why the decision has been made the way that it has [been],” he said. 

“I’d be hopeful that the view [of those investors] is not a common view.”

Committed to the cause

Incoming interim CEO Peter King, who was previously due to leave the bank in 2020, has noted that he is “personally committed” to executing the bank’s response plan to the AUSTRAC investigation.

“We will carry out this work with diligence and speed, and we will also provide public updates on our progress,” he said.

Mr King apologised on behalf of Westpac for the bank’s shortcomings.

“I also want to pass on my deep sorrow for Westpac’s failings,” he said.

“I have worked at Westpac for 25 years. I know our people and I know they have the highest integrity and are committed to doing the very best for customers and the community. 

“Looking forward, we have a big agenda, and I am committed to our strategy.”

He continued: “While we are facing challenges, our businesses remain in good shape, our balance sheet is strong, and we have made significant progress in restructuring our businesses and transforming our technology platforms.”

Mr King confirmed that he will serve as interim CEO for “as long as the board needs me”, adding that the “stability of the company is very important”.

Government welcomes Hartzer departure

Treasurer Josh Frydenberg has welcomed the news of Mr Hartzer’s resignation and Mr Maxsted’s premature departure.

“These issues develop a momentum of their own but there needed to be accountability,” he said.

“The alleged breaches that have been levelled at Westpac are very serious, both in terms of the number of those alleged breaches but also the nature of them; 23 million alleged breaches of our anti-money laundering laws.”

Mr Frydenberg added that he does not expect the scandal to undermine Westpac’s position in the banking landscape.

“I don’t think it will compromise Westpac’s ability to continue to be an important financial service provider in this country,” he said.

“Let’s not forget, it’s Australia’s oldest bank. Let’s not forget that millions of Australians have transactions with Westpac and rely on them to be holding their savings or be providing them with loans to grow their business.

“These are going to be pretty difficult days, not just for the board and for the management of Westpac, but no doubt for its thousands of employees across the company. But it will get through it and will continue to play a vitally important role in our economy.”

 [Related: Hartzer to step down as Westpac CEO]