Westpac takes $1.16 billion charge for laundering, refunds

SYDNEY (BLOOMBERG) – Westpac Banking Corp. has taken a A$1.2 billion (S$1.16 billion) 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 on Monday (Oct 26) 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 per cent in early Sydney trading on Monday, paring this year’s decline to 22 per cent.

Westpac releases full-year results on Nov 2.

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