How Westpac is managing the impact of COVID-19
As Westpac confirmed Peter King as the CEO, the bank’s chair John McFarlane outlined the approach the bank was taking in the current market.
In a letter to shareholders on Thursday, McFarlane wrote about the challenges and opportunities ahead for the bank, including the impacts of COVID-19.
McFarlane said the bank remained among the best capitalised in the world with “significant liquidity resources”
“We have increased the proportion of customer deposits in our funding profile, while also reducing our reliance on short term wholesale funding”.
Like the other major banks, Westpac has already moved to provide a range of support measures to help its retail and business customers.
McFarlane signalled that together with the economic downturn and some of these actions will impact the short-term financial performance of the bank.
While the bank will be providing further details in its results in May, he reminded shareholders that the “value of our company is directly linked to the success of our customers and growth in the overall economy”.
“Therefore, it is in the best interests of the company that we support as many customers as possible through this once in a lifetime event’.
Given “these moments of uncertainty”, McFarlane said that management strength was crucial and therefore the bank “needed a CEO in place now not later”.
On Thursday, Westpac also announced acting CEO King as the bank’s CEO.
“I have built a strong relationship with Peter since we first met.
Westpac also needs to re-invent itself to create an effective long-term response to the exponentially evolving digital economy
“He understands the Bank, its business and its finances, and has the confidence of the management team as well as my own and that of the Board,” McFarlane said.
“He and I are also completely aligned on what needs to be done.
“He is therefore the right person to take the company forward at the present time, and he now has the full authority to make change and to see it through.”
The bank chair also emphasised that innovation will be key going forward.
Already the bank is rolling out its Panorama platform as continues to remain focused on driving digital services for its customers.
Despite the challenged environment, McFarlane said the bank still needed “to simplify processes “ which will be crucial in consolidating the bank’s number of brands following years of acquisition.
He added that “here is a pressing need to simplify processes and invest heavily in moving to a more modern and cost-efficient, integrated environment”.
“Westpac also needs to re-invent itself to create an effective long-term response to the exponentially evolving digital economy and the threat of new lean and agile fintech competitors”.
McFarlane also acknowledged that regulatory action remained pending including the Austrac fallout.
Here he said a focus on non-financial risks was important and outlined a board revamp.
A separate committee, the legal and regulatory committee will handle regulatory and legal investigations and remediation, including financial crime remediation.
This will allow the bank’ board risk and compliance committee “to focus on setting, and ensuring adherence to, risk appetite, current and future credit policies, market and operational risks as well as mitigating them”
In addition to technology, the board technology committee will also oversee data
For McFarlane, the global COVID-19 pandemic “has brought extraordinary challenges in the way we manage our lives, our health, our workplaces and our finances.
“I have family spread around the world and share much of the anxiety I know many of you must be feeling.”