Why Westpac CEO Brian Hartzer had to go

Shareholder demand amid continued public pressure have resulted in the inevitable demise of Westpac chief Brian Hartzer and chair Lindsay Maxsted.

Maxsted met with shareholders and proxy advisers yesterday and the board met last night to make the changes unveiled today.

These include Hartzer’s departure to be replaced on an acting basis by CFO Peter King.

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Maxsted will go by the middle of next year by which time a new chief executive will be installed. His most likely replacement is fellow KPMG illumni Peter Nash, with David Lindburgh the internal heir apparent to Hartzer.

Ewen Crouch, who chaired the Westpac board risk committee and long time partner at Westpac’s closest legal advisers Allens will also step aside.

The final story that sunk Westpac CEO Brian Hartzer https://t.co/l1qA6eNgOf great scoop by @vanOnselenP @australian

— John Lehmann (@lehmannatlarge) November 25, 2019

ANZ is now the only one of the top four banks to have same leadership following the royal commission, with NAB losing its top two earlier in the year, CBA replacing its top brass two years ago and now the broom going through Westpac.

Brian Hartzer. Picture: Hollie Adams

There will be a call for an external replacement but this is not easily done in part because the scandals to hit the Australian banks follow those which hit offshore banks after the GFC.

The Australian banking sector prided itself on its ability to avoid the GFC fallout, but this hubris is now being shown out as mistaken arrogance.

The local bank oligopoly is protected by government mandate and sadly the industry believed its own hubris.

Prime Minister Scott Morrison has led the call for accountability and Maxsted has now delivered.

He has previously defended Hartzer, saying he just happened to be the chief now, and that didn’t make him responsible for what went wrong.

This missed the point. Hartzer fell because he failed to move quickly to fix the problems when they first became evident, which was when the bank self-reported the customers involved in the potential child exploitation cases.

Well that aged badly, Brian Hartzer. pic.twitter.com/bz99qAC4eP

— Damien Hurrell (@DamienHurrell) November 25, 2019

Yet the Austrac scandal was only the final straw. Hartzer has underperformed the other banks since being appointed and the royal commission exposed a series of problems, from fees for no service to selling so-called “liar loans”.

Lack of proper diligence is the greatest sin evident in all of the above and the reason why Hartzer fell.

He reportedly told his executive team just to get on with their business and remember this scandal was nothing compared to Enron.

Hartzer was wrong.

Westpac like rest will now face internal upheaval which hopefully will deliver a better banking system.

Lindsay Maxsted has belatedly done the right thing but he lost the moral high ground when he attempted to fight the inevitable last week.

The better response would have been for both he and Hartzer to go immediately and at the same time unveil an inquiry. The inquiry now looks like a time saving device .

Remember Westpac self-reported the 12 customers involved in Philippines child exploitation in October 2018. So how can it now claim to have just heard the allegations when it was the one which raised the possibilities in the first place?