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What’s next for Westpac?

Lachlan Maddock
— 1 minute read

With the post-mortem firmly underway, the federal government interrogated Australia’s peak banking association on what Westpac should do next.

Members of the standing committee on economics grilled Australian Banking Association (ABA) CEO Anna Bligh for over an hour on Friday. Westpac is a member of the ABA, and former CEO Brian Hartzer served as chairman of the association in 2015.

The woke bank?
The always delightful Craig Kelly used his time to wonder aloud whether Westpac’s reputation as a so-called “woke” bank led to it breaching money laundering legislation 23 million times.

“How much do you think that Westpac – and to some extent the other banks – are so much involved in this appearance of political correctness, these trendy issues of the day, and not focusing on their core business, has led to them getting into such trouble?”

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The question was based off a cartoon by Johannes Leak, who attempted to establish a causal link between wearing purple to work and accidentally facilitating child sex trafficking. 

“My view is that Australian banks have obligations that they are required to meet and those obligations are broad,” Ms Bligh said. 

“They include having to take account, under the prudential framework, of climate risk in their lending assessments. They include meeting the requirements of the ASX listing rules and ASX guidelines that go to questions in relation to diversity.”

Ms Bligh settled the matter by saying it was now a matter for the regulators. It remains to be seen whether the regulators will be looking at Westpac’s climate change fun runs. Investigations are more likely to hinge on the bank’s awkwardly timed $2.5 billion capital raise, which the bank has now given retail investors the opportunity to withdraw from after what one can only imagine was a polite but terse conversation with ASIC. 

The prodigal bank returns
Andrew Leigh continued to lay the groundwork for Labor’s attempt to drag Westpac back before the committee, repeatedly trying to draw Ms Bligh on what she would think if Westpac made a return appearance. But Ms Bligh didn’t take the bait. 

“I think that is ultimately a matter for this committee. There is no doubt that the charges laid by AUSTRAC go to matters that are extremely serious.”

Mr Leigh noted that the ABA had been happy to form an opinion on what the federal government should do when it was entertaining the notion of a royal commission into the banking industry – Ms Bligh’s comments opposing the commission have aged like milk – but the former Queensland premier stood firm. 

“Should this committee decide at any future time to inquire into any matter, I think you could expect full co-operation, as you are entitled to. In relation to what matters you choose to determine that is a matter for this committee,” she said.

Culture wars
But Ms Bligh wasn’t as neutral on the matter of culture. While Ms Bligh said that the royal commission was an “excoriating experience” for bankers and that “sunlight is a powerful disinfectant”, she didn’t seem to think there might be a bigger problem.

“Do you think there needs to be more people explicitly and directly held accountable for their conduct to get cultural change?” Committee Chairman Tim Wilson asked, using the example of Westpac, and wondering whether the industry is ‘sailing’ and hoping for the best. 

“I don’t think any bank is sailing and hoping for the best,” Ms Bligh said.

“What I see is every bank doing everything in their power, working hard, for real cultural change.”

Ms Bligh said that the level of accountability in the banking sector had increased since the royal commission, but didn’t express an opinion on whether heads needed to roll if real change was to be effected. 

Westpac has now appointed an independent auditor – Promontory, who provided oversight on CBA’s remedial action plan. Doubtless the auditor will have their work cut out for them, but at the very least they’ll be in familiar territory.

 

What’s next for Westpac?
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