Approximately $6.4 billion has been wiped from Westpac’s value since it was ensnared in a money laundering and child exploitation scandal.
Westpac says it will update investors “in coming days” over how its money laundering and child-exploitation scandal occurred and what it is doing to make sure it never happens again.
Chairman Lindsay Maxsted said the board of Australia’s second largest bank, which met on Friday to discuss the scandal, “unreservedly apologises” for its failings.
Meanwhile, Westpac shares slipped into the red for a third straight session as some investment groups urged shareholders angered by the bank’s failure to properly monitor payments potentially linked to the streaming of child exploitation to reject its remuneration report for a second consecutive year.
Mr Maxsted said Westpac had established what he called a “multi-layered review” of the bank’s anti-money laundering measures and planned to appoint independent experts to assess accountability for the failures that prompted Wednesday’s announcement of legal action by AUSTRAC.
The bank has had as much as $6.78 billion wiped from the bank’s value in the three trading sessions since Australia’s financial crime watchdog lodged a statement of claim in the Federal Court alleging 23 million breaches of money laundering laws.
“Our Board, CEO, and management team are fully committed to fixing these issues and we are taking all steps necessary to urgently close any remaining gaps and fix our policies and procedures so that this can never happen again,” Mr Maxsted said.
The claims include that the bank knew, since 2013, of child exploitation risks associated with some 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.
Westpac shares slipped as much as 2.03 per cent on Friday amid criticism from investor groups and politicians.
Rival Commonwealth Bank lost its chief executive and agreed in June 2018 to pay a record $700 million fine for similar breaches.
And NAB recently admitted it faces the prospect of a huge fine for multiple possible breaches of counter terrorism and anti-money laundering laws, and said it is working with AUSTRAC to assess how deep the issue runs.
Investment research firm Morningstar has downgraded its stewardship rating for Westpac from ‘exemplary’ to ‘standard’ in light of the AUSTRAC allegations.
Nonetheless, the firm said any financial penalty coming Westpac’s way would not impact its ability to meet its common equity Tier 1 ratio target of 10.5 per cent and sustain its dividend payout.
Westpac chief executive Brian Hartzer, who has led the bank since February 2015, said late Thursday he was “utterly horrified” by the previous day’s allegations and accepted “the need for accountability” but has refused to say whether he might quit.
Westpac shares closed about about 1.5 per cent lower and have given up almost seven per cent since Wednesday, representing a $6.4 billion reduction in the bank’s market capitalisation.