Westpac’s board isn’t waiting any longer to find CEO Peter King’s replacement
The banking major’s board is actively looking to replace CEO Peter King by the end of the year, a group of analysts and investors have been told in briefings with new chairman Steven Gregg.
Westpac’s board is actively looking to replace chief executive Peter King by the end of the year, a group of analysts and investors have been told in briefings with new chairman Steven Gregg.
During recent meetings with the new chairman, selected investors and analysts heard directly from Mr Gregg the nation’s second-largest home loan financier is now actively searching for a replacement, sources familiar with the meetings told The Australian.
While the market expected the new chairman could trigger a change of guard at a bank still undergoing reconstruction following a four-year stint by a reluctant CEO brought in after a massive money laundering scandal in 2019, the accelerated timeline has caught some off-guard.
Westpac has not made any public announcement to the exchange with a timeline or specifics of the ongoing process. When contacted, a spokesman for the bank declined to comment.
In July, the bank had telegraphed a succession plan within a few years, with newly reshuffled internal candidates Anthony Miller (business banking head) and Jason Yetton (consumer boss) being evaluated over that period.
At the time, Mr King stated he had “plenty to do” before stepping down and the bank’s messaging to investors was that he was highly motivated in his role.
But two months after arriving at Westpac and following the bank’s quarterly update, Mr Gregg has been meeting with a number of stakeholders seeking to understand investors’ questions and concerns about the company.
Technology upgrades at Australia’s oldest bank and succession plans, particularly regarding leadership changes, are understood to be the two key issues on investors’ minds.
The bank has told investors it expects its “CORE” fix – referring to a multi-year risk and regulatory upgrade program of work – should be done by the end of the year.
At that point the bank will be ready for change and a new CEO will be best placed to take the next stage of its technology simplification agenda.
But at that point, some market sources have suggested, it could be too soon to promote Mr Yetton or Mr Miller to the top job. The bank is currently undertaking a candidate search for the perfect leader to drive growth and complete the next step of the multi-year simplification agenda.
That consists of consolidating two-thirds of its 180 back office systems into “just” 60 over the next four to five years at a cost of about $2bn per year.
Westpac will brief analysts and investors on those plans at a technology update on March 27.
In 2019, as CFO, Mr King handed in his resignation just weeks before he became duty-bound to take the top job when both the then CEO Brian Hartzer and chairman Lindsay Maxsted announced they would leave over a financial crimes scandal.
Days before, Westpac had been accused by money laundering watchdog, Austrac, of systemic misreporting of suspicious transactions, including some associated with possible child exploitation.
The debacle was partly due to outdated and sub-par systems, and even after $5.8bn in investments since 2019 and penalties of $1.4bn, the bank has still not finished fixing them.
Westpac shares have risen over 5 per cent since it released its quarterly update on February 19.
They have, however, underperformed peers and the market in recent years. The stock has risen 11 per cent since Mr King took on the job in December 2019, compared to 15 per cent gains by the ASX/200 index and gains of 39 per cent by its bigger rival Commonwealth Bank.
Mr King has not been paid long-term bonuses in the past eight years because the bank’s total shareholder return (TSR) hurdle has not been met. Average TSR metrics over the past four years have been negative since 2020 and the four year average was -9.27 per cent in 2023, according to the bank’s annual reports.
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