Westpac Takes A$1.2 Billion Charge for Laundering, Refunds
(Bloomberg) -- Westpac Banking Corp. has taken a A$1.2 billion ($871 million) charge against second-half earnings to cover a record money-laundering fine and the mounting cost of compensating customers for years of misconduct.
The charge is the latest blow to Australia’s oldest bank, which last month was hit with a A$1.3 billion penalty for the country’s biggest breach of anti-money laundering laws. Earlier this year it deferred paying a dividend as bad-debt charges swelled amid the coronavirus-induced recession.
Among the charges announced Monday were:
- A$415 million for the money-laundering fine, including legal costs. Westpac had previously provisioned A$900 million for a settlement, but the cost blew out after further breaches were uncovered.
- A$568 million to write down the value of its life insurance and auto-finance units, as well as software
- A$182 million to compensate customers, including business borrowers and wrongly-charged insurance fees
- A$55 million from asset sales and revaluations
Chief Executive Officer Peter King is seeking to restore the bank’s battered reputation after the money-laundering scandal led to the departure of predecessor Brian Hartzer. Westpac shares rose 0.7% in early Sydney trading, paring this year’s decline to 22%.
Westpac releases full-year results Nov. 2.
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