The CEO of Australia’s Westpac Banking Corp (ASX: WBC) has quit on Tuesday after reports suggested he was involved in a money laundering scandal involving child exploitation.
The news comes just one day after he told staff that this was “not a major issue” and that he intended to stay on in his position at the Australian bank.
Shares in Westpac currently trade at AUD24, seeing a 1.72% jump on Tuesday. 26/11/19 13:35BST.
Where Westpac have been hit with legal implications, the global banking sector is still being haunted by cut throat market conditions.
Established names such as Lloyd’s (LON: LLOY) and HSBC (LON: HSBA) have seen their third quarter profits decline in tough trading conditions.
Additionally, overseas banks including Deutsche Bank (ETR: DBK) appear to be in crisis following a third quarter loss report.
Brian Hartzer announced his departure from the 2nd December, and added to the list of Australian banks who have lost their top executives in the past 18 months.
Regulator AUSTRAC last week launched legal action accusing Westpac of enabling 23 million payments in breach of anti-money laundering laws, including the facilitation of offshore payments relating to child exploitation
Chairman Linday Maxsted had said at the weekend that change in senior leader would be destabilizing for the bank.
However, this tone changed on Tuesday when Maxsted announced both Hartzer’s exit and that his own retirement in the first half of next year. He had said in September he had no intention to retire.
“We sought feedback from all our stakeholders … it became clear that board and management changes were in the best interest of the bank,” Maxsted said in a statement.
Maxsted added in a media call that his successor would run a global search for a new CEO and Chief Financial Officer Peter King would take over in the interim. King said he would stay “as long as the board needs me”.
Hartzer had told senior staff in a meeting on Monday that the crisis was “not an Enron or Lehman Brothers”, according to The Australian newspaper, referring to the two famous corporate collapses.
Larger rival Commonwealth Bank of Australia (ASX: CBA) had also been subject of investigation by regulator AUSTRAC, which resulted in a $700 million penalty and the early retirement of its CEO.
This scandal will put bad media spotlight onto Westpac, and certainly consumers and shareholders will take a while to get over this injustice.
