Westpac decides to ride with Peter King

Westpac’s new CEO Peter King. Picture: Nikki Short

It was at a Westpac board meeting on Tuesday that its CEO search was formally ditched, meaning the pointy end of negotiations to lock in bank stalwart Peter King got under way.

King, known to his colleagues as Kingy or Peking Duck, was perceived as a safe pair of hands with intimate knowledge of bank’s funding, balance sheet and how to navigate a crisis.

The task of conducting an external and internal search with state and international borders closed and other delays caused by having to manage the COVID-19 crisis had become too great.

King, a 25-year Westpac veteran and former CFO, then committed to a two-year stint in the top job. That will be reassessed about this time next year, when the board will restart its succession deliberations and no doubt have a broader list of external candidates.

It also provides Westpac executives with more time to prove their mettle and have a crack at the CEO’s office.

King said he had a “massive agenda” including sharpening risk management, compliance and accountability functions.

“We are well progressed on our thinking… for some businesses a lot of it will be done this year.”

He was referring to removing Westpac’s so-called matrix management structure to ensure clearer lines of accountability and compliance within each business unit. The focus areas include the customer, compliance and performance.

This will all happen against the backdrop of a likely recession in Australia and Austrac’s legal action against the bank, which may spur a penalty in the order of $1bn.

The board — under the new stewardship of John McFarlane — has to be commended for taking an axe to Westpac’s short-term bonuses for executives in 2020, as part of collective accountability for the alleged 23 million breaches of financial crimes laws.

It may end up being a double hit too. Last year’s short-term bonuses were frozen, before being paid, pending the outcome of the bank’s accountability review.

It was absurd that the 2019 bonuses weren’t scrapped after the Austrac scandal become public, but Westpac’s board may redeem itself.

Balancing act

Commonwealth Bank boss Matt Comyn gave struggling mortgage customers seeking a six-month repayment pause a modest leg up on Thursday.

But it’s not an easy calculation. The bank is providing a one-off payment to cover the additional interest incurred, over the six-month loan deferral period, just on the interest portion of the loan while it is not being paid.

For a $350,000 home loan that amounts to about $45 to offset the effect of interest being charged on loan interest over the six-month period.

Comyn told this column CBA had received about 50,000 requests from mortgage holders to pause repayments over the past two weeks, up from a normal average of about 100 requests a day.

CBA has set up a robotic and digital process to facilitate the flood of loan deferrals.

The bank is also providing a reprieve to credit card customers, via a refund of late fees and interest for those that didn’t make their March minimum payment.

The additional measures come after shock jock Alan Jones piled pressure on Comyn over the repayment deferrals this week.

Treasurer Josh Frydenberg went into bat for CBA on Thursday after the decision, calling on other banks to do the same.

“Following discussions with the CBA we welcome their announcement to automatically refund late fees and interest for the month of March for their credit card customers,” he said.

“I now look forward to hearing from other banks to hear what relief they can provide.”

Comyn has been the face of the banking sector’s interactions with government and regulators as the coronavirus pandemic has gripped the economy. He is chair of the Australian Banking Association and is racking up to two years at the CBA helm this month.

Good cause

Corporate goodwill regarding the COVID-19 crisis has ramped this week with non-bank lender La Trobe Financial donating $1m to the Epworth Hospital. The funds will assist in the provision of additional intensive care unit medical equipment to cope with an anticipated influx of admissions.

“It is important to assist the frontline specialist ICU medical team at one of Australia’s pre-eminent hospitals. We recently donated $1m during the bushfire crisis… and we are stepping up again during this new national emergency,” La Trobe CEO Greg O’Neill said. “This pandemic represents a unique situation for the global and local economy. While the full human and economic impacts are still largely evolving, we are working with both industry and government to limit the effect on our customers, staff, communities and our business partners.”

The donation comes in the same week that Australia’s richest person, Anthony Pratt, tipped $1m into a trial of existing HIV and arthritis drugs that could stem the coronavirus tide.

Clive Palmer last week donated $1m to the Royal Brisbane and Women’s Hospital’s Coronavirus Action Fund and is also funding the manufacture or acquisition of a million doses of Hydroxychloroquine to treat COVID-19. Chinese billionaire Jack Ma donated $2.15m to the Doherty Institute, while Andrew Forrest’s Minderoo Foundation is securing medical supplies from China as part of a $160m funding package.