Westpac’s King Just Got the Toughest Job in Australian Banking

(Bloomberg) --

Westpac Banking Corp. career banker Peter King has just taken on one of the hardest jobs in Australian banking.

As well as navigating Australia’s oldest bank through its first recession in a generation, King must restore the lender’s battered reputation after allegations of a massive breach of anti-money laundering laws in November cost both the previous chief executive officer and chairman their jobs.

“We know we’ve got to lift our game in risk management,” King said in an interview.

King, who had been due to retire this year, was named permanent CEO on Thursday after the board decided in the face of the unfolding coronavirus crisis it needed the experience and stability his 25-year career with the bank would bring.

Despite a record stimulus package unveiled by the Australian government, analysts are expecting a huge rise in unemployment and bad debts. That’s something King, like his fellow CEOs, is seeing play out in real time as thousands of customers apply for aid such as mortgage deferments.

“We’ve had over 100,000 applications for the consumer assistance package so far,” King, 50, said, adding the bank is building up its hardship teams to handle the spike in cases. “We’ve had a lot of customers who’ve lost their job overnight.”

King said it’s too soon to estimate how high bad loans will rise. It will have to make an initial estimate when Westpac presents its half-year results in May, but like in the global financial crisis King said he expects the picture to evolve over time.

“It depends on how quickly the economy restarts and how quickly it can rebound back,” King said. “That’s really the point we know how much true stress there is in the economy.”

Seeking Settlement

Beyond steering the bank through the crisis, King’s to-do list will include bolstering controls after it was blindsided by allegations from the country’s financial crimes agency of systemic problems in its anti-money laundering systems, including failing to detect payments linked to child abuse.

The bank still intends to try and settle the suit filed last November by the Australian Transaction Reports and Analysis Centre, King said.

“If we can, we will,” he said. “We are working constructively with Austrac and we will see where we can get to.”

Analysts have estimated that any settlement is likely to cost the bank in excess of A$1 billion ($611 million).

King had been chief financial officer since 2014 and held senior positions across the bank including in treasury and financial services. His appointment makes sense given the extraordinary circumstances, according to fund manager Rod Bristow.

“In many ways it was a no-brainer decision,” said Bristow, CEO of Sydney-based Clime Investment Management. “Peter is respected by the market and has the deep knowledge of the bank you need at a time like this.”

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