Westpac share price and dividend: where next as CEO resigns
Westpac (ASX: WBC) today announced that Managing Director and Chief Executive Officer, Brian Hartzer, would step down from his current role(s), effective December 2.
Westpac CEO resigns
It was just yesterday that the Australian Financial Review ran a story pointing out that Westpac’s (ASX: WBC) Chairman – Lindsay Maxsted – had put Westpac’s CEO – Brian Hartzer – on notice.
Given the circumstances, it was hardly a surprise.
Even less surprising then was today's announcement that Westpac’s MD and CEO, Brian Hartzer, would be stepping down from the role – effective December 2.
'As CEO I accept that I am ultimately accountable for everything that happens at the Bank. And it is clear that we have fallen well short of what the community expects of us and we expect of ourselves.'
Adding to this, it was pointed out that:
'Mr Hartzer has been given 12 months notice and will be paid his fixed remuneration of $2.686m over this period.'
Not a bad outcome considering the circumstances and at the very least Mr Hartzer will be forgoing his ‘FY19 'Short-Term Variable Reward.'
Of course, given the magnitude of the alleged breaches – some 23 million of Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act – it always seemed a matter of when there was going to be a radical upper-management shakeup – not if.
Peter King, Westpac’s current Chief Financial Officer, will assume the top CEO spot in an acting capacity, in the interim.
In step with this, Westpac’s current Chief Operating Officer – Gary Thursby – will assume the role of acting Chief Financial Officer.
Board disruptions and a continued discussion
Besides this C-suite shakeup, Mr Maxstead announced that he would bring his previously planned retirement as Chairman from the Westpac (ASX: WBC) Board forward to H1 FY20.
Speaking of these broad changes, Mr Maxsted said:
'As was appropriate, we sought feedback from all our stakeholders including shareholders and having done so it became clear that board and management changes were in the best interest of the Bank.'
Other directors, such as Ewen Crouch, noted that they would not seek re-election at Westpac’s upcoming AGM.
Westpac share price: the potential implications
With all this instability, it is unsurprising that some brokers have turned further bearish on the bank.
On a conservative estimate, Bell Potter for example suggests that Westpac could be fined as much as $3.7bn – or $161 per offence of the AML/CTF Act.
With this fine in focus, the broker also believes that Westpac’s dividend – which was also slashed during the bank’s FY19 results – could come under further pressure. Specifically, the broker expects it to be cut to $1.50 per share in the years ahead.
As a result of this Westpac (ASX: WBC), may also be required to pursue another capital raise, says the broker.
In saying that, legal storm clouds are already beginning to form around the bank over the $2bn cap raise it completed just a few weeks ago.
Watch this space.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.