Comment: Westpac may mourn Whitfield loss

A shift in strategy - and even a decline in the balance sheet  - may be on the agenda as the highly regarded Westpac Institutional Bank chief Rob Whitfield walks out the door at Westpac.

Lyn Cobley, a Barclays trained insto banker, may be one agent of a new tilt by Westpac in the banking landscape.

The confidence and competence of the lenders and risk managers at Westpac Institutional Bank is only one reason WIB has soared away from the competition and underpinned the growth story at Westpac.

A fervour for institutional banking is generally a favourable attribute at a bank. Understanding of economy-wide risks must be maximised when insto risk taking is vigorous.

Might some of this orientation now be leaving Westpac for good? The answer to this may prove concerning for customers thankful for the chance at a more vivid engagement with a bank (and seeing a shortage of risk averse peers with which to compare it.)

WIB is Westpac and some may say Whitfield was WIB - an admired if sometimes flawed leader.

He might pop up in Asia or in private equity and either way emerge as a potential champion of industry reform wherever he lands.

In his place bank CEO Brian Hartzer and new WIB chief Cobley must decide whether Westpac follows the market into the mire, or continues to stand out in banking.

The search for capital savings (and even special dividend promoting) measures must be intense at Westpac. The coming APRA lasso on industry capital practices is a driver of new thinking across the industry.

A rationing of capital by APRA will wash over WIB as much as residential lending.

Hartzer has conservative roots and will not lack the courage to question WIB's idiosyncratic settings and steer the bank in any direction he thinks best.