Westpac Survives Marathon Meeting as Directors Returned

(Bloomberg) -- Westpac Banking Corp. survived a turbulent annual general meeting without further bloodletting after the nation’s powerful pension funds swung their support behind the board.

The four directors up for election -- Nerida Caesar, Steven Harker, Peter Marriott and Margaret Seale -- were all reappointed, according to voting tallies at the meeting in Sydney on Thursday.

The bank is still reeling from allegations it breached anti-money laundering laws more than 23 million times and failed to prevent payments linked to child abuse. The scandal cost former Chief Executive Officer Brian Hartzer his job, forced Chairman Lindsay Maxsted to bring forward his retirement and has wiped more than A$7 billion ($4.8 billion) off the lender’s market value.

Fronting retail shareholders for the first time since the scandal broke, Maxsted was peppered with questions for more than five hours on why Hartzer received a A$2.7 million payout, how the money-laundering breaches went undetected for so long and who was responsible.

At one stage, the room resounded with cheers and applause after a disgruntled shareholder called on the entire board to quit and return their fees, saying they had “comprehensively stuffed up.”

While shareholders delivered a so-called second strike by voting against the bank’s pay report for the second year in row, they overwhelmingly rejected a motion to make all board members stand for re-election.

Influential proxy advisors and some of the nation’s largest pension funds had indicated in advance they were backing the bank in the interests of stability.

Maxsted opened the meeting by saying the board is “truly sorry” that it may have exposed people to harm after Australia’s financial crimes agency alleged it failed to detect transactions linked to child abuse.

“We are devastated that anyone may have been exposed to the risk of harm as a result of a failing by Westpac,” Maxsted said in his opening address. “Many of you are here today because of your long association with Westpac. You believe in this company and we have let you down.”

Westpac shares fell 1.2% to A$24.10 at 4 p.m. Sydney time, compared to a 0.6% decline in the broader benchmark index. The stock is down almost 4% this year.

Acting Chief Executive Officer Peter King also expressed his contrition and apologized.

The claims by the financial crimes agency “show that we must change the way we work,” King said in his opening address. “I am focused on our need to improve end-to-end processes and accountability and I will make the hard decisions.”

On the outlook, he said the bank is expecting operating conditions to “continue to be soft” with growth remaining low, interest rates expected to fall further, and ongoing regulatory intensity.

“While this environment will continue to drag on performance in the 2020 year, we should see some balance sheet growth without a significant deterioration in credit quality,” King said. “However, there will be extra costs as we work through the remaining regulatory issues.”

To contact the reporter on this story: Emily Cadman in Sydney at ecadman2@bloomberg.net

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Peter Vercoe, Katrina Nicholas

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