Big Four regulatory introspection in wake of Westpac CEO & Chair stepping down
(29 November 2019 - Australia) Incoming NAB CEO Ross McEwan is being urged by key stakeholders to make a firm statement regarding the group’s regulatory risks in the wake of the Australian Transaction Reports and Analysis Centre (AUSTRAC) Federal Court case against Westpac alleging 23 million breaches and CBA’s A$700 million fine for damaging anti-money laundering (AML) shortfalls in 2017.
The action against Westpac resulted in the departure of Westpac CEO Brian Hartzer after five years in the role in addition to Chairman Lindsay Maxsted bringing forward his departure date. Westpac is expected to incur a billion-dollar fine or greater as incoming Westpac acting CEO Peter King vowed to deal with the serious problems raised by AUSTRAC as he tries to bring about stability at the banking giant, after "one of the most challenging weeks in Westpac's history".
Mr McEwan brings recent experiencing navigating complex regulatory issues and a political balancing act after restoring the fortunes of the Royal Bank of Scotland (RBS). An avid All Blacks fan, Mr McEwan was born in Hastings, New Zealand, but has a strong connection to the market given his father was Australian not to mention he was also Retail Banking Head at CBA before taking the helm of RBS in 2013. After being appointed in July, Mr McEwan said despite the damage inflicted on NAB during and after the royal commission he didn’t consider it a ‘broken bank’.
“We can repair the things that went wrong with this bank over the next few years,” he said. “We need customers trusting us, it’s not a poisoned chalice” Mr McEwan stated.
In NAB’s 2019 annual report, the bank informed that it had reported ‘a number of AML and counter-terrorism financing compliance breaches to regulators and had responded to requests for information’. NAB’s report identified issues including ‘certain weaknesses’ with the implementation of the Know Your Customer (KYC) requirements, other financial crime risks, as well as systems and process issues that impacted transaction monitoring and reporting. The bank was still reeling after the premature exit of previous CEO Andrew Thorburn former Chair Ken Henry earlier this year following fierce criticism of the bank in the fallout of the royal commission, arguably faring the worst among the Big Four majors.