Westpac shake-up unlikely to be worst fallout

The chairman’s position is the first priority, because that person will be pivotal to the choice of Westpac’s next CEO. Picture: Getty Images

The Westpac board meeting in the run-up to Thursday’s annual meeting will confirm the blindingly obvious.

A second strike on the embattled bank’s remuneration report is almost a certainty; a follow-up vote to spill the board will likely fail, and respected non-executive director Peter Marriott’s bid for re-election is in serious trouble.

Austrac’s statement of claim, which alleges a systemic breakdown in Westpac’s control environment, indifference by senior management and inadequate oversight by the board, could be wallpaper for the bank’s hall of infamy.

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If there’s any solace for directors, the 202-year-old lender’s crisis in 1992 was far worse.

The fallout from Westpac’s near-death experience, brought about by a reckless concentration of risk in commercial property, was brutal.

In quick succession, the bank reported a $1.67bn loss, suffered an $880m shortfall in an emergency capital raising, and directors briefly had the pleasure of Kerry Packer’s company after the nation’s then-richest person conducted a $500m raid.

By the time Packer and his chum Al Dunlap stormed out of a board meeting in high dudgeon, the casualty list of Westpac directors extended to nine.

Brian Hartzer. Picture: AP

The bank’s annual meeting, which attracted 5000 mostly hostile shareholders, went into a second day.

Measured against the 1992 experience, the Austrac-induced crisis looks positively benign.

Chief executive Brian Hartzer’s departure matches the sacrificial offering of then-CEO Frank Conroy to appease Packer, while chairman Lindsay Maxsted’s early retirement is the modern-day equivalent of Eric Neal’s resignation.

Maxsted probably sees it differently after two weeks in the furnace over links between 12 Westpac customers and child exploitation in The Philippines.

Westpac chairman Lindsay Maxsted. Picture: David Geraghty

However, Ewen Crouch’s acceptance that he was likely to face decisive opposition to his re-election on Thursday falls well short of the long tail of board departures in 1992-93.

Contrary to speculation, this week’s board meeting is unlikely to resolve the chairman’s position.

It’s a fluid situation and things could change, but at this stage it’s not contemplated that either of the two main internal contenders - ex-Morgan Stanley Australia boss Steve Harker and former KPMG Australia chair Peter Nash - will be anointed.

Search firm Korn Ferry is continuing to undertake an orderly process to locate Maxsted’s successor.

The chairman’s position is the first priority, because that person will be pivotal to the choice of Westpac’s next CEO.

If it’s not to be acting CEO and former chief financial officer Peter King, a six-to-nine month global search is likely, including a notice period for any serving CEO.