Westpac raises $770m as potential fines loom
Westpac bulks up to pay potential fines with $770m raising from retail investors in its share purchase plan.
Westpac has hauled in $770m from retail investors in its share purchase plan, electing to accept all applications in full as it prepares to pay a massive financial penalty to Austrac.
In a welcome piece of good news ahead of what is expected to be a hostile annual meeting on Thursday, the bank said it would issue 31.9 million new shares at $24.20 apiece.
This was after $68m of withdrawal requests were granted to investors who had applied for shares before Austrac lodged its Federal Court statement of claim on November 20.
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The issue price compared to Tuesday’s closing price of $24.21, down 14c, and equated to a 2 per cent discount to the volume weighted average price of shares traded in the five days leading up to December 2.
Westpac originally said it would raise about $500m from the SPP, in addition to the $2bn soaked up from institutional investors at $25.32 a share.
Just over two weeks elapsed from the institutional placement to the Austrac court action.
With the $700m penalty paid by Commonwealth Bank the only precedent, Westpac is likely to have to stump up about $1bn in any commercial settlement.
In other developments, Westpac board committees began meeting on Tuesday ahead of a full board meeting on Wednesday.
As proxy votes continued to flow in, a second strike on the bank’s remuneration report is considered almost certain given the required “no” vote is only 25 per cent.
Offshore pension funds closely follow the recommendations of proxy adviser ISS, which has advised clients to vote against the pay framework.
While a second strike is a formality, the odds are extremely short that Westpac will avoid a board spill.
The big domestic funds mostly believe that the widespread bloodletting should stop, after chief executive Brian Hartzer resigned, chairman Lindsay Maxsted brought forward his retirement to next year, and non-executive director Ewen Crouch decided not to seek re-election.
However, as a relatively long-serving non-executive director and chairman of the audit committee, Peter Marriott has been targeted as well.
His bid for re-election is believed to be too close to call.
As to the next chairman, search firm Korn Ferry is hunting down candidates to succeed Mr Maxsted.
The leading internal candidates are former Morgan Stanley Australia boss Steve Harker and ex-KPMG Australia chair Peter Nash.
While there was speculation that Mr Maxsted could announce a successor at the annual meeting, this is now seen as extremely unlikely.
The priority is to settle on the new chairman, who would then play a key role in choosing the next chief executive.
Former chief financial officer Peter King, who has filled the role on an acting basis, will stay in the job for as long as required.
If an external chairman is chosen, the odds would shorten on an internal CEO, such as Mr King.
Equally, the appointment of an internal chairman would allow the board greater latitude to pick an external CEO.
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