Westpac shares have dropped to a nine-month low after the prime minister urged Westpac’s board to consider chief executive Brian Hartzer’s position over the bank’s money laundering and child exploitation scandal.
The stock fell another 3.4 per cent at the start of trade on Thursday, meaning as much as $6.2 billion has been wiped off the market capitalisation of Australia’s second largest bank since AUSTRAC’s allegations were made public on Wednesday morning.
The latest fall, which followed a 3.3 per cent decline the previous day, suggested investors were unconvinced by Mr Hartzer’s response to the crisis in a hastily arranged media briefing late in the day.
Prime Minister Scott Morrison said Mr Hartzer’s future was in the hands of the board after the financial crime watchdog accused the bank of breaking money laundering and counter-terrorism financing laws more than 23 million times.
The claims include the bank knew since 2013 of child exploitation risks associated with frequent small payments to Southeast Asia but did not act appropriately until 2018 and still does not monitor all channels for transfers potentially linked to the live-streaming of child abuse.
“They should be taking this very seriously, reflecting on it very deeply, and taking the appropriate decisions for the protection of people’s interests in Australia,” Mr Morrison told ABC radio on Thursday.
Mr Hartzer, who has led Westpac since February 2015, said he was “utterly horrified” by the allegations and accepted “the need for accountability” but refused to say whether he might quit.
Mr Hartzer, who appeared before MPs in Canberra only two weeks ago, blamed a combination of technical and human failings and said he had only been made aware of the matter a month ago.
Mr Morrison said AUSTRAC had done its job and now the board and executive of Westpac needed to do the same.
“These are some very disturbing transactions involving despicable behaviour,” he said.
Labor frontbencher Tanya Plibersek said the revelations were shocking, with the links to child exploitation particularly concerning.
“It can’t be swept under the carpet and the management of the bank really do need to take responsibility for what’s gone on on their watch,” she told Sky News.
Commonwealth Bank’s CEO quit after AUSTRAC in 2017 accused it of 53,000 breaches of money laundering and terrorism-funding laws.
CBA eventually settled the case for an Australian corporate record $700 million, suggesting that Westpac could face a huge fine after AUSTRAC applied to the Federal Court for civil penalty orders relating to 23 million breaches of law.
Westpac has already provisioned $1.4 billion for customer remediation during the past three years for issues including the fees-for-no-service scandal aired at last year’s financial services royal commission.
Mr Hartzer told the House of Representatives’ economics committee on November 8 that Westpac could not rule out additional charges beyond FY20.
Rival National Australia Bank last week admitted it faced a huge fine for multiple possible breaches of counter-terrorism and anti-money laundering laws.
Westpac shares dropped as low as $24.80 in early trade, their lowest since early February.
At 1130 AEDT, they had rallied a little but were still 2.5 per cent lower for the day at $25.03.
AAP
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