Westpac CEO Brian Hartzer is to step down, alongside other board changes, following Westpac’s AUSTRAC scandal.
Following on from the damning AUSTRAC scandal surrounding Westpac, group chief executive officer Brian Hartzer will be stepping down as CEO, with the current CFO Peter King taking over as acting CEO, effective from 2 December.
The chairman of the board, Lindsay Maxsted, also announced that he will bring forward his retirement as chairman to the first half of 2020. This will enable the board to seek a new CEO under a new chairperson.
Mr Maxsted also asked long-standing director, Ewen Crouch, not to seek re-election at the upcoming AGM.
“The board accepts the gravity of the issues raised by AUSTRAC,” Mr Maxsted said.
“As was appropriate, we sought feedback from all our stakeholders, including shareholders, and having done so, it became clear that board and management changes were in the best interest of the bank.”
Mr Maxsted thanked Mr Hartzer for his service.
“Brian leaves the bank with a strong balance sheet, with each of our businesses number one or two in their markets.”
Mr Hartzer said: “As CEO, I accept that I am ultimately accountable for everything that happens at the bank. And it is clear that we have fallen well short of what the community expects of us and we expect of ourselves.”
Speaking of the incoming acting CEO, Mr Maxsted commented: “Peter King has been appointed acting CEO until a global search process for a new CEO is completed.
“Peter has had a long and distinguished career at Westpac and has been the CFO since 2014. He is the right choice to provide stability and direction to the bank and its people.
“He is an executive of exceptional integrity who is deeply respected by the market and the entire Westpac team,” Mr Maxsted said.
“The board has asked Peter to focus on two immediate priorities: to implement the Westpac Response Plan and to continue to execute the group’s broader strategy.
“We are determined to urgently fix these issues and lift our standards to ensure our anti-money laundering and other financial crime prevention processes are industry-leading.
“We are currently working through our response to the Statement of Claim and will shortly commence the independent review. The board will continue to provide updates on these issues.”
Mr Maxsted said he would also like to acknowledge and thank Ewen Crouch for his “integrity and substantial contribution” during his six and half years as a director of Westpac.
“Ewen’s extensive legal experience and commercial knowledge has been invaluable to the board.”
Current chief operating officer Gary Thursby will act as CFO.
Incoming acting CEO Peter King said: “I am honoured to be appointed to this role. I understand the responsibility of this position and the importance of Westpac both as an institution and Australia’s oldest bank. I am committed to helping address the current issues and restore the reputation of the bank.”
In a media call following the bank's announcements, Mr King, who was previously due to leave the bank in 2020, added that he is “personally committed” to executing the bank’s response.
“We will carry out this work with diligence and speed and we will also provide public updates on our pores,” he said.
Mr King apologised on behalf of Westpac for the bank’s shortcomings.
“I also want to pass on my deep sorrow for Westpac's failings,” he said.
“I have worked at Westpac for 25 years. I know our people and I know they have the highest integrity and are committed to doing the very best for customers and the community.
“Looking forward, we have a big agenda, and I am committed to our strategy.”
He continued: “While we are facing challenges, our businesses remain in good shape, our balance sheet is strong, and we have made significant progress in restructuring our businesses and transforming our technology platforms.”
Mr King confirmed that he will serve as interim CEO for “as long as the board needs me”, adding that the “stability of the company is very important”.
Last week, Australia’s anti-money laundering and terrorism financing regulator, AUSTRAC, revealed that it was seeking civil penalty orders against the big four bank over 23 million alleged breaches of anti money-laundering laws.
According to AUSTRAC, the bank failed to appropriately monitor outgoing international funds transfer instructions (IFTIs) of customers, including those which it alleges are “consistent with child exploitation typologies”.
One of the more damning examples in AUSTRAC’s Statement of Claim are the assertions that one such customer transferred money to a person located in the Philippines who was later arrested in November 2015 for child trafficking and child exploitation involving live streaming of child sex shows.
The bank has since issued a response plan to the issues raised, and the case is ongoing.