Westpac completes $2bn share placement

Westpac has completed the $2 billion share placement it says will help the bank fulfil its regulatory capital requirements and cover the cost of future litigation related to customer remediation issues.

Approximately 79 million new fully paid ordinary shares in Westpac have been issued at the price of $25.32 with the company expected to emerge from a trading halt at Tuesday’s open.

Westpac shares were last trading at $27.88.

The lender, which is also undertaking a $500 million share purchase plan, announced the capital raising on Monday as nearly $1 billion in customer remediation provisions sapped its full-year result.

Westpac’s full-year cash profit dipped 15 per cent to $6.85 billion in what chief executive Brian Hartzer dubbed a disappointing 12 months.

Mr Hartzer said the bank had suffered in a low-growth, low interest rate environment, while it was also weighed down by the $958 million customer remediation provision – related to issues including fees for no advice and overcharged loan interest.

Additional litigation costs associated with remediation are expected in 2020.

Westpac also said it was tapping shareholders to give it an increased buffer above APRA’s “unquestionably strong” capital benchmark of 10.5 per cent.

The bank’s common equity Tier 1 capital ratio is currently 10.7 per cent.

Mr Hartzer took home $4 million in realised pay in FY19, but the managing director did not receive a short-term bonus after shareholders’ resoundingly rejected the bank’s remuneration report in 2018.

AAP

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