ASIC raises concerns over Westpac’s CEO search comments

ASIC has raised concerns about the future of Westpac’s CEO after The Australian reported chairman Steven Gregg communicated succession plans to a selected group.

The corporate regulator has raised concerns about the future of Westpac’s CEO after The Australian reported chairman Steven Gregg communicated to a selected group of people the bank was actively looking to replace Peter King by the end of the year, sources said.

The stock exchange put the nation’s second largest home lender on notice on Wednesday with the ASX compliance team putting a call with the lender following the report, two people familiar with the enquiries told The Australian.

ASIC enquired with the ASX about information shared by Westpac’s chairman as part of ongoing regulatory matters raised on Wednesday, the people added.

The bourse, which alongside the Australian Securities and Investments Commission oversee continuous disclosure rules, was said to be satisfied the matter was not above the threshold necessary to trigger a formal request for information under listing rule 3.1

ASIC, ASX and Westpac declined to comment.

Westpac is obliged under continuous disclosure rules to update the market of any material developments that could affect the value of its share price. The ASX and ASIC closely monitor market movements and determine if the market was trading whilst informed or ill informed.

Peter King has steered Westpac after emerging as emergency CEO in 2019. Picture: NCA NewsWire/Tertius Pickard

ASIC recently secured a court win over Westpac’s smaller rival, ANZ, over breaches to its continuous disclosure obligations. That court fight related to a 2014 share placement by the Melbourne-based lender where an overhang of shares was not disclosed to the market.

On Wednesday, The Australian reported Mr Gregg had met with selected investors and analysts following the bank’s February quarterly update seeking feedback from investors and outlining his priorities.

It was at these meetings that the chairman flagged the bank would likely be ready for new leadership sooner rather than later.

The market expected the new chairman could eventually trigger a change of guard at a bank still undergoing reconstruction following a four-year stint by a reluctant Mr King, who as CFO had already resigned in 2019.

A number of investors contacted by this masthead saw the development as an “obvious evolution” given Mr King’s resignation in 2019, but the accelerated timeline caught some off-guard.

Westpac has not made any public announcement to the exchange with a timeline or specifics of the ongoing process.

The Sydney-based lender is due to brief investors about its technological turnaround plans on March 27. However, veteran banking analyst Brian Johnson told clients this week the succession process meant the management team that will be presenting then is unlikely to “be responsible for delivering the project”.

In July, Westpac telegraphed a succession plan within a few years. Newly reshuffled internal candidates – business banking head Anthony Miller and consumer banking boss Jason Yetton – were to be evaluated over that period.

At the time, Mr King stated he had “plenty to do” before stepping down and the bank’s message to investors was that he was highly motivated in his role.

But the succession progress under Mr Gregg, who took the chair in December, means it could be too soon to promote either of the internal candidates to the top job.

Mr King has steered Westpac after emerging as emergency CEO in 2019 when the then CEO, Brian Hartzer, and chairman Lindsay Maxsted announced they would leave in response to the bank’s financial crimes scandal. But Westpac’s turnaround is only half done.

The first part of Westpac’s technological turnaround - its multi-year risk and regulatory upgrade program of work that has been a large driver of the bank’s more than $5.8bn investment spend since 2019 – is almost complete. The final sign-off on that work, however, needs to come from the banking regulator, which since 1019 has imposed a $1bn capital overlay on the bank.

The second part of its technology simplification program, involves consolidating two thirds of its 180 back office systems into “just” 60 or fewer over the next four to five years at a cost of about $2bn per year.

That is seen as too long a timeline for Mr King to remain CEO.