Westpac Banking Corp (WBC.AX) said on Friday a regulator-ordered report found the lender had not made enough improvements to its risk management and culture even after it was sued for allegedly enabling payments between known child exploiters.
FILE PHOTO: Pedestrians walk past the ground floor of an office building with Westpac logo amidst the easing of the coronavirus disease (COVID-19) restrictions in the Central Business District of Sydney, Australia, June 3, 2020. REUTERS/Loren ElliottAustralia’s second-largest bank said that, as a result, it would launch a multi-year programme to fix shortcomings in its management of non-financial risk that the report found to be “immature and reactive”.
The report was requested by the regulator after the financial crime watchdog sued Westpac for millions of money laundering law breaches in an ongoing case. The case may go to trial next year as there are allegations Westpac disputes.
“Our reassessment confirms that our management of non-financial risk is currently not at the standard we set for ourselves,” incoming Chief Executive Officer Peter King said in a statement.
The report found Westpac to be “overly complex which results in confusion around accountability and challenges in execution.”
The case brought last year triggered the exit of Westpac’s previous CEO and chairman in a major managerial shake-up, with Westpac just this week filling the last of its top three positions.
The bank is yet to appoint new unit heads in its consumer and institutional banking divisions.
The new programme announced on Friday will focus on improving risk frameworks, setting higher leadership standards and providing additional training to staff, the bank said.
The regulator-ordered report comes after an already critical self-assessment in 2018 that the regulator demanded of all large banks following a separate case of money laundering law breaches at bigger peer Commonwealth Bank of Australian (CBA.AX). [reut.rs/2DKn1EE]
In that self-assessment, Westpac identified 45 recommendations to fix governance concerns. As of the bank’s interim results in May, only 30 had been implemented “from a design standpoint”, Friday’s report showed.