Westpac CEO Peter King has fronted the House of Representatives Standing Committee on Economics, explaining that the bank is looking to simplify its operations and get past its governance and compliance problems.
King, accompanied by Les Vance, Westpac group executive for financial crime, compliance and conduct, appeared yesterday afternoon, and told the committee that about 15 per cent of new loans being written by his bank were for first home buyers – a proportion that's roughly the same as CBA.
Asked by committee chair Tim Wilson if it would be possible to tighten lending rules in a way that did not disadvantage first-time buyers King said that macro-prudential considerations would need to be taken into account to examine the role leverage is playing in housing prices.
He suggested three key factors were high LVR lending, the amount of interest-only lending and the amount of investor lending.
King also told Wilson that that loans deferred as part of Westpac's COVID-19 response had been reduced to "almost zero" – from A$55 billion and 148,000 customers to $2 billion, involving around 4500 customers, who have been moved from deferral to hardship cases.
The tone changed when deputy chair Andrew Leigh asked King if he was willing to rule out any takeover of Suncorp, were it to come up as an opportunity for Westpac.
King said he had seen the media speculation on that deal but was unable to comment on any M&A that might take place in the future.
"There are clear competition rules in this country and any acquisitions the bank undertook would be required to meet those requirements," he said.
Leigh also grilled King over the fallout from last year's $1.3 billion fine for multiple breaches by Westpac of anti-money laundering rules, and quoted from an APRA report that described an "immature and reactive risk culture, unclear accountabilities, capability shortfalls and inadequate oversight" at the bank.
Leigh also reminded King that Westpac's self-assessment report in 2018 pointed to "an organisational tendency to cultivate complexity and a tendency to privilege upfront conceptual work over execution and implementation”.
"In other words you are good at starting things and they quickly became complex, and the follow-through is lacking," the Leigh said.
King responded that Westpac had introduced a broader program of change than merely improving its AML monitoring and compliance programs. He explained that among the responses was a new operating model "to give more end-to-end management of key businesses and processes".
He also told Leigh that Westpac had started a multi-year program to uplift financial crime capabilities, reviewing processes, controls and reporting to Austrac.
"We've also moved to simplify our portfolio of businesses. We are in the process of exiting our insurance businesses – life insurance auto insurance, as well as super platforms and investments and overseas businesses. When we finished those divestments the group will be narrower in its scope, predominantly banking," King said.
Fielding a series of pointed questions from MPs over abusive texts sent via Westpac's payments system, Les Vance said approximately 4700 transactions with abusive messages from about 3500 customers had been