Westpac yesterday confirmed that it will slash the number of staff employed in its financial crime and fraud prevention areas - a move that has put it on a collision course with the Finance Sector Union.
Banking Day understands that the bank is preparing to cull 37 full time equivalent roles from the financial crime prevention operation, including some staff employed on permanent contracts.
Westpac has been plagued by a raft of risk management problems in recent years, the latest being the Papas loan scandal in which millions worth of loans were secured from the bank through alleged frauds committed by Greek Australian businessman, Bill Papas.
For most of this year the bank has been restructuring its fraud prevention functions after it gave court enforceable undertakings to the Australian Prudential Regulation Authority to improve the way it manages operational and other risks across the business.
The FSU is concerned that the staff cull could impose additional work pressures on crime prevention staff retained by the bank.
“Fraud and financial crime prevention is an area that Westpac must continue to staff properly so they avoid the risk management problems of recent years,” said Joanne Nava, the FSU’s acting secretary for NSW and the ACT.
“Westpac also needs to invest to keep ahead of emerging issues in the financial crime area.”
A Westpac spokesman said the staff cuts related to several remediation projects that are nearing completion.
“Over the last couple of years Westpac has more than doubled the number of people who work in its financial crime and fraud prevention areas to increase capability and address the increasing activity required in financial crime,” the bank spokesperson said.
“Over this time Westpac has undertaken a number of remediation projects as well as continuing to improve its AML processes including updating its technology, and operational procedures.
“As these activities conclude Westpac will streamline its structure in these areas.
“As you would expect this will likely result in a reduction in staff.
“However, Westpac will consult with any impacted staff and look for redeployment opportunities.”
A lot is riding on Westpac’s ability to address APRA’s concerns about the group’s underperforming risk culture.
The bank continues to wear a $1 billion regulatory capital overlay that cannot be removed until improvements are made to its risk management systems, including the crime prevention and anti-money laundering functions.