SYDNEY: Westpac Banking Corp has taken a A$1.2bil (US$871mil) charge against second-half earnings to cover a record money-laundering fine and the mounting cost of compensating customers for years of misconduct.
The charge is the latest blow to Australia’s oldest bank, which last month was hit with a A$1.3bil penalty for the country’s biggest breach of anti-money laundering laws. Earlier this year it deferred paying a dividend as bad-debt charges swelled amid the coronavirus-induced recession.
Among the charges announced yesterday were A$415mil for the money-laundering fine, including legal costs. Westpac had previously provisioned A$900mil for a settlement, but the cost blew out after further breaches were uncovered.
A$568mil is to write down the value of its life insurance and auto-finance units, as well as software. A$182mil is to compensate customers, including business borrowers and wrongly-charged insurance fees, while A$55mil is for asset sales and revaluations.
CEO Peter King is seeking to restore the bank’s battered reputation after the money-laundering scandal led to the departure of predecessor Brian Hartzer. Westpac shares rose 0.7% in early Sydney trading, paring this year’s decline to 22%. It releases full-year results on Nov 2. — Bloomberg
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