Westpac gives investors option to withdraw from share purchase plan over Austrac

Westpac is giving investors who bought shares as part of the bank’s capital raising the option to pull out of the scheme.

Westpac is giving shareholder the option to pull out of its capital raising.

Westpac is giving retail investors who bought shares as part of the bank’s current capital raising prior to the Austrac revelations that have rocked the bank the option to pull out of the scheme.

“Following discussions with ASIC, Westpac will provide a withdrawal option for SPP applicants who applied for shares under the share purchase plan prior to the Austrac announcement on 20 November 2019,” the bank said in a statement to the ASX before the market opened on Thursday.

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“All other terms and conditions of the SPP, including key dates remain unchanged,” the bank said.

The option to withdraw from the scheme will remain open until next Friday, while the share purchase plan itself closes to applications on Monday. Shares purchased through the plan are due to be issued on 11 December.

“Westpac have reflected and done the right thing by small retail shareholders,’’ said Brett Paton, the chairman of boutique wealth management firm Escala Partners.

“Given their capital raising involved both a non prospectus placement and an SPP, it is only fair that retail investors that normally rely on a prospectus in these instances be given relief in the form of a withdrawal option from the SPP.”

Investors were due the right to be able to review their investment commitment after the emergence of the AUSTRAC issue and changes to the board and management, and given the potential requirement in the future for the bank to raise more capital.”

Westpac announced a $2.5 billion capital raising at the start of the month alongside its full year results. The raising consisted of a $2bn share placement with institutional investors and a $500m share purchase plan for retail shareholders.

“The offer proceeds will be used to strengthen Westpac’s balance sheet and support customers’ growth. The additional capital will increase the buffer above APRA’s ‘unquestionably strong’ CET1 capital ratio benchmark of 10.5 per cent,” the bank told investors at the time.

The issue price for the Share Purchase Plan will still be price below $25.32 – the price paid by institutional investors – and the volume-weighted average price over the five trading days up to and including the closing date of 2 December, less a 2 per cent discount.

Westpac shares will continue to underperform, according to Clime Investment Management senior analyst, David Walker.

ASIC confirmed earlier this week that it was investigating Westpac over the Austrac issues, including whether directors had breached their duty to act “effici­ently, honestly and fairly”. ASIC also indicated it was considering examining potential breaches of disclosure rules in relation to the capital raising.

Westpac told investors to make contact via its website or by phone if they wished to withdraw from the plan.

“Eligible withdrawal applicants will need to provide their holding number to verify their registered holding and details of their application. Refunds to eligible withdrawal applicants must be for the full application payment. Refunds will be made as soon as practicable after the issue date and in the same manner as for invalid applications and for any scale back of applications,” Westpac said in its statement.

By mid-afternoon, Westpac’s shares had declined around 0.5 per cent to be trading at $24.70.

The news comes after two proxy advisers cranked up the pressure on the bank on Wednesday, taking aim at high profile director Peter Marriott.

The bank also faces revelations that it had a history of Austrac compliance issues and that it was warned of problems even before Austrac pushed its landmark case against Commonwealth Bank in 2017.