Australia‘s Westpac Banking Corp said on Tuesday its chief executive officer will step down and its chairman will bring forward his retirement as a money-laundering scandal rocks the country’s second-largest retail bank.
Chairman Lindsay Maxsted bowed to public and investor pressure on Tuesday, announcing that CEO Brian Hartzer would step down on December 2.
The departure appears to be an abrupt change of course given that the previous day, Hartzer cancelled end-of-year parties but assured staff “this is not a major issue”, according to The Australian newspaper.
Maxsted, meanwhile, confirmed he will bring forward his retirement to the first half of 2020.
“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,” he said in a statement before the start of trading on Tuesday.
Westpac was accused of enabling 23 million payments in breach of anti-money laundering laws, including between known child exploiters.
In interviews with local media at the weekend, Maxsted had said firing Hartzer during the crisis would be destabilising for the bank.
Hartzer has been with Westpac for more than seven years, taking over as CEO and managing director in 2015.
Chief Financial Officer Peter King, who announced his retirement in September, will now take over as acting CEO of Australia’s oldest bank, effective December 2. The bank has an annual general meeting scheduled for December 12.
“I think it’s welcome, I think it’s appropriate,” Health Minister Greg Hunt said on Sky News, minutes after the Westpac announcement. “The prime minister was absolutely clear when these revelations came out that the board had to reflect on the leadership.”
Australian Prime Minister Scott Morrison had called on the bank to consider the CEO’s future last week after the country’s financial crime agency, AUSTRAC, made the allegations in a lawsuit against Westpac.
Shadow treasurer Jim Chalmers welcomed the departure, which he said “shows that people need to be accountable for the behaviour of companies under their leadership (and) clearly there has been a failure of leadership here”.
A Westpac spokesman was not immediately available for comment on Tuesday, Reuters reported.
The departures make Westpac the third of Australia’s four major banks to lose one or both of its top executives following scandals within a year and a half, underscoring the intense scrutiny on the country’s financial sector.
Larger rival Commonwealth Bank of Australia was accused of similar breaches by the Australian Transaction Reports and Analysis Centre in 2017, resulting in a record 700 million Australian dollars ($474.5m) penalty and prompting the bank to bring forward its CEO Ian Narev’s retirement.
Financial planner AMP Ltd lost its CEO, chair and several board members during the Royal Commission inquiry over accusations of doctoring a supposedly independent report to a regulator, while wealth manager IOOF Holdings lost its CEO and chair over accusations in the inquiry of improperly using retiree money to prop up investment losses.
A separate legal action by a regulator found the IOOF bosses had not broken any laws.
In February, soon after the Royal Commission’s final report was published, the CEO and chair of the third-largest lender, National Australia Bank, stood down after being singled out in the document for failing to accept responsibility for the bank’s wrongdoings.
Westpac’s shares edged up 1.2 percent in early trade on Tuesday, having slumped eight percent over the previous four trading days since the regulator announced its lawsuit, wiping 7.5 billion Australian dollars ($5.08bn) off the bank’s market capitalisation.