K: Financial and Insurance Services

The Westpac money laundering scandal – Australia’s largest case of moral blindness?

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Original article by Michele Levine, CEO, Roy Morgan
Corporate Governance Update – Page: Online : 27-Nov-19

Before its money laundering scandal, Westpac was the ‘least distrusted’ of the big-four banks. That is about to change. In the immediate wake of Westpac being accused by the regulator of breaching anti-money laundering laws 23 million times, the question is, how could there be such a comprehensive failure of governance? Shareholders, employees, customers – and ultimately the courts – all want to know what went wrong. Was it intentional or did the breaches go unnoticed? Chances are we have witnessed corporate Australia’s largest case of moral blindness. On the march to prosperity following the GFC, many C-Suite executives and company directors felt liberated from the shackles of ethics, freed and legitimated by the need to rebuild shareholder value. Moral blindness, it seems, was sanctioned by this ‘prosperity imperative’. A decade later the Financial Services Royal Commission exposed moral blindness across the sector. Possibly the most spectacular revelation was the moral blindness exhibited by the then AMP Chair and CEO. Now it’s Westpac’s turn in the moral blindness spotlight. If any good is to come of the Westpac scandal it is the recognition that every corporate board needs an Ethics Committee to combat intentional wrongdoing. And moral blindness.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AMP LIMITED – ASX AMP, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

‘QE will do nothing’: fundies back infrastructure spending

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Original article by Robert Guy
The Australian Financial Review – Page: 28 : 27-Nov-19

Quay Global Investors portfolio manager Chris Bedingfield contends that the Reserve Bank of Australia should not implement quantitative easing. He argues that the federal government should instead prioritise increased spending on infrastructure, noting that this will create jobs in the short-term and boost productivity in the long-term. Sarah Shaw of 4D Infrastructure also advocates investing in infrastructure to stimulate the economy.

CORPORATES
QUAY GLOBAL INVESTORS PTY LTD, 4D INFRASTRUCTURE PTY LTD, RESERVE BANK OF AUSTRALIA, BENNELONG FUNDS MANAGEMENT PTY LTD

Westpac’s Austrac scandal differs from other institutions

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Original article by Robert Gottliebsen
The Australian – Page: 29 : 26-Nov-19

Westpac’s scandal is completely different to scandals that cost the jobs of top executives at the Commonwealth Bank, National Australia Bank and AMP in recent years. Westpac chairman Lindsay Maxsted says that the board had no prior warning of Austrac’s legal action or the specific nature of its allegations. However, Austrac alleges that Westpac was aware of concerns about payments linked to child exploitation as far back as 2013. The question arises as to whether CEO Brian Hartzer was aware of these concerns and withheld this from the board.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AMP LIMITED – ASX AMP

Local bourse is ready to test record highs

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Original article by David Rogers
The Australian – Page: 28 : 26-Nov-19

The benchmark S&P/ASX 200 index has gained 19 per cent so in 2019, and it is just two per cent shy of the record high of 6,875.5 points in late July. A number of factors could see the local bourse reach a new peak, including a resolution to the US-China trade war and the potential for policy stimulus in December’s mid-year fiscal and economic outlook. However, the federal government is unlikely to pursue stimulus measures before the May 2020 Budget, as it continues to focus on a surplus.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA, MORGAN STANLEY AUSTRALIA LIMITED, CITIGROUP PTY LTD

Investors demand action by Westpac

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Original article by Joyce Moullakis
The Australian – Page: 17 & 21 : 26-Nov-19

Nathan Parkin of Ethical Partners Funds Management contends that some at a high level at Westpac needs to be held accountable for the financial penalties that will arise from its massive breach of anti-money laundering laws. Meanwhile, one of Westpac’s 20 largest shareholders believes that CEO Brian Hartzer will not be to able to remain at the helm in the wake of the scandal. Westpac’s share price has fallen by 8.8 per cent since the scandal was revealed.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, ETHICAL PARTNERS FUNDS MANAGEMENT PTY LTD, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, PLATO INVESTMENT MANAGEMENT LIMITED, OWNERSHIP MATTERS PTY LTD, AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED, INSTITUTIONAL SHAREHOLDER SERVICES INCORPORATED, NORGES BANK INVESTMENT MANAGEMENT, BLACKROCK INCORPORATED, THE VANGUARD GROUP INCORPORATED

Stay calm, this is no Enron

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Original article by Peter Van Onselen, Michael Roddan
The Australian – Page: 1 & 2 : 26-Nov-19

Westpac CEO Brian Hartzer has told his executive team that there is no need to "overcook" the money-laundering and child exploitation scandal that has embroiled the bank. He has argued that it is not a major issue for "people in mainstream Australia". Sources have also indicated that Hartzer has told executives to focus on issues such as lifting Westpac’s net promoter score and writing more home loans. He is also said to have downplayed any comparisons to Enron and Lehman Brothers.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. DEPT OF HOME AFFAIRS, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, MOODY’S INVESTORS SERVICE INCORPORATED, VICTORIA. DEPT OF TREASURY AND FINANCE

Westpac must start hunt for a new CEO

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Original article by Terry McCrann
Herald Sun – Page: 35 : 21-Nov-19

It is inevitable that Westpac CEO Brian Hartzer will have to step down in the wake of the banking sector’s latest money laundering scandal. This will leave ANZ’s Shayne Elliott as the only CEO of a big four bank who was appointed prior to the Hayne royal commission. The only issue for Westpac’s board is whether to opt for an internal or external successor. Meanwhile, questions need to be asked about the failure of Austrac to ensure that Westpac and the Commonwealth Bank were complying with anti-money laundering laws.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Remediation bill $10bn and counting

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Original article by Richard Gluyas
The Australian – Page: 21 : 20-Nov-19

A parliamentary committee has been told that the total cost of customer remediation programs in the financial services sector has now topped $10bn. However, the Australian Securities & Investments Commission’s deputy chair Karen Chester said that customers have only been paid $660m in compensation to date. Meanwhile, ASIC chairman James Shipton has indicated that the corporate regulator will release updated guidance on responsible lending obligations before the end of 2019.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. JOINT STATUTORY COMMITTEE ON CORPORATIONS AND FINANCIAL SERVICES, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC

Minutes show Reserve Bank was close to November cut

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Original article by Matthew Cranston
The Australian Financial Review – Page: 8 : 20-Nov-19

The minutes of the Reserve Bank of Australia’s board meeting on 5 November show that the central bank gave serious consideration to reducing the cash rate to 0.5 per cent. However, board members took into account factors such as the likely effect of further monetary policy easing on savers and consumer confidence. The board ultimately concluded that the best course of action would be to wait until the impact of previous interest rate cuts became clear.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CITIGROUP PTY LTD

Super funds approach double-digit returns, but Chant West urges caution

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Original article by David Rogers
The Australian – Page: 27 : 19-Nov-19

Data from Chant West shows that superannuation funds have achieved an average return of 14.3 per cent so far in 2019. The median growth fund gained 12.8 per cent in the first 10 months of the calendar year, after eking out a gain of 0.4 per cent in October. Mano Mohankumar of Chant West says the median growth fund appears to be on track to deliver a double-digit return in 2019, although he warns that the strong returns since the global financial crisis are not sustainable.

CORPORATES
CHANT WEST FINANCIAL SERVICES PTY LTD, SUPERRATINGS PTY LTD