Westpac chairman Lindsay Maxsted has admitted the bank did not act quickly enough to implement “robust” monitoring of money transfers potentially linked to child abuse.
Mr Maxsted told his final annual general meeting as chairman that, while Westpac identified and filed suspicious matter reports on the customers whose transfers led to legal action by the financial crimes regulator, the bank was too slow to act.
“We should have implemented more robust transaction monitoring earlier than we did,” Mr Maxsted told shareholders in Sydney on Thursday.
“This would have generated more suspicious matter reports to AUSTRAC.”
The bank’s money laundering and child exploitation scandal is expected to dominate proceedings at what could be a lengthy, anger-filled AGM which has already seen the board of directors described by one investor as “at best incompetent and negligent, and at worst complicit and culpable.”
Westpac could cop a second strike against its remuneration report and a significant protest vote against the re-election of director Peter Marriott, who has been on the board since 2013 and is a member of the risk and compliance committee.
The bank faces potentially billions in fines over allegations it breached money laundering laws 23 million times and failed to properly monitor payments potentially linked to child sex offences in south east Asia.
As well as bracing for the AUSTRAC maelstrom, acting chief executive Peter King flagged Westpac expects tough operating conditions to continue amid a low growth environment and the likelihood of even lower interest rates and ongoing regulatory intensity.
Customer remediation in the wake of the financial services royal commission and exiting advice business already reduced cash earnings by around 15 per cent – or $1.1 billion – in FY19, with the bank also cutting its final dividend from 94 cents to 80 cents, fully franked.
Last year’s remuneration report was voted down by 64 per cent of investors after Westpac was dragged over the coals at the banking royal commission.
If 25 per cent or more of shareholders reject Westpac executives’ pay packets on Thursday, an automatic vote will be triggered as to whether the bank will hold a spill meeting and potentially clear the decks of directors.
The prospect of a spill meeting is highly unlikely though, as investor groups seek to maintain some stability at an institution that has already lost its chief executive Brian Hartzer, and is preparing for the imminent departures of Mr Maxsted, and risk and compliance committee chair Ewan Crouch.
Shares in the bank were 0.82 per cent lower at $24.18 after a hour’s trade on Thursday – and have slipped 8.9 per cent since the AUSTRAC allegations were aired last month.
That’s wiped about $8.5 billion from the company’s market capitalisation.
AAP
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