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Australia’s Westpac Takes A$1.2B Charge Against Q2 Earnings for Laundering, Refunds

Westpac Banking Corp. has taken a A$1.2 billion ($871 million) 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$1.3 billion 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 Monday were:

• A$415 million for the money-laundering fine, including legal costs. Westpac had previously provisioned A$900 million for a settlement, but the cost blew out after further breaches were uncovered.
• A$568 million to write down the value of its life insurance and auto-finance units, as well as software
• A$182 million to compensate customers, including business borrowers and wrongly charged insurance fees
• A$55 million from asset sales and revaluations.

Chief Executive Officer 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%.

Westpac releases full-year results Nov. 2.

Related:

• Australia’s Westpac Expects $578M Fine for Money Laundering Linked to Child Abuse
• Westpac’s Money Laundering Breaches Gave ‘Free Pass to Pedophiles:’ Australia Official
• Australia’s Westpac Bank Apologizes for Money Laundering, Links to Child Abuse Funds