Further suggestions emerged on Monday that Westpac could exit wealth management, announcing it would move its Wealth Platforms business into a “Specialist Businesses” division, along with other units that are non-core.
According to analysts from Citi, the decision is a positive for groups such as Netwealth and HUB24.
In the Specialist Businesses division would be its wealth management platform Panorama.
Westpac is expected to conduct a strategic review of the ‘Specialist Businesses’ and flagged that some of the businesses could be sold to a more suitable owner.
The bank is the largest platform provider in Australia, with 19 per cent market share, and started a price war in 2018 by materially lowering its platform pricing.
“While Westpac’s wealth platform business is expected to operate as normal, we see the increased uncertainty regarding the future as a positive for Netwealth and HUB24 in the short term,” Citi said in a research note.
“From a medium-term perspective, the impact would depend on the ultimate owner of Westpac’s wealth platform business.”
Citi analysts said that the entry of a new and more focused platform
operator would be a negative for the wealth management groups, but industry consolidation would be a positive.
“We also see a low probability of Netwealth and HUB24 participating in industry consolidation.”
Citi said that they expected less competition from new entrants, as advisers focused on ‘known’ and financially stable platforms.
Further, the economic uncertainty has also resulted in a number of specialist platforms announcing cost-reduction measures in order to preserve cash.
“In our view, this places Netwealth and HUB24 in a comparatively stronger position – especially Netwealth - given their stronger balance sheets.”
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