Westpac channels Frank Conroy's 1992 exit

George Lekakis
Westpac chair Lindsay Maxsted
The announcement of Brian Hartzer's departure from Westpac early on Tuesday morning must count among the most dramatic moments in the modern history of Australia's oldest company.

Hartzer's resignation, which takes effect at the end of the week, brought back memories among veterans at the bank of another former Westpac CEO - Frank Conroy - who was forced to resign his position at the height of the bank's last existential crisis 27 years ago.

In 1991 Conroy inherited the reins of a corporate basket case that was haemorrhaging from a flawed global strategy and reckless lending culture.

In a brief phone conversation yesterday with Banking Day, Conroy conceded that Hartzer's departure had refired the most painful memory of his career when Sydney business giant Kerry Packer convinced other Westpac directors to remove him as the top executive.

While declining to comment on the Austrac matter, Conroy said he was disappointed by media reporting of the claims made against the bank.

"I suppose it's a bit of deja vu, isn't it?" he said.

"It just seems to me from all the articles I've read that only a handful of journalists have used the term 'it is alleged' in their coverage.

" I don't know the details of the issues but I do know they remain allegations until they're heard by a court."

One of the paradoxes of Conroy's demise at Westpac was that most parts of his plan to fix the bank were implemented by his successor, Bob Joss.

A similar fate appears to have befallen Hartzer who announced a plan to rectify the AML compliance problems on Sunday.

Outgoing chairman Lindsay Maxsted yesterday confirmed that the recovery program would be implemented by his acting replacement - Westpac's chief financial officer, Peter King, who won't step into the role until 2 December. This is also the first day at work for NAB's new CEO Ross McEwan.

Peter King is taking on a reputational and operational mess of epic dimensions.

The hard-fought restoration of public trust in the Westpac brand under Joss in the mid 1990s and his successor David Morgan now lies in tatters, with directors of the bank reeling from the public backlash over the Austrac allegations filed last week in the Federal Court.

While institutional shareholders might argue that the bank should look to an outsider as the next CEO, the imperatives of corporate self-preservation probably suggest that the group's besieged directors are more likely to lean toward an internal candidate.

That would be the safest play for a board that is facing class actions and multiple regulatory probes over the quality of its recent disclosures to investors about its AML compliance challenges.

If that is a correct reading of the Westpac board's direction then King looms as the leading candidate to take the management reins.

The Westpac veteran of 25 years dropped a big hint yesterday during a media teleconference that he might throw his hat in the ring for the permanent role.

In September King gave the bank notice of his intention to retire as an executive of the company in 2020, however he says he could reverse that decision.

"I will be here for as long as the board needs me," he said.

"We do not have an end date… I'm completely committed to this role and haven't made a decision on the future."

However, with four directors - Peter Marriott, Nerida Caesar, Margie Seale and Steve Harker - each seeking re-election at the AGM in Sydney on 12 December, shareholders will have an opportunity to reshape the board's composition as a way to influence the next CEO appointment.

The AGM looms as a volatile event for the board, which is also facing the likelihood of the remuneration report being voted down by 25 per cent of shareholders for the second year in a row.

That would trigger a spill of all board positions and intensify the chaotic circumstances of the company.