Westpac back to basics with bush banking

The banking major has admitted it got it wrong after shuttering its Moree branch, reopening the operation in a bid to expand bush business banking.

Westpac chief executive Anthony Miller (L) has reopened the bank's Moree branch after touring a key customer's agricultural operations. Pictures: David Ross

As Westpac gathered nearly 100 key customers in Moree, the bank’s boss Anthony Miller was preparing to admit the bank got it wrong after shutting the northern NSW cropping town’s branch two years earlier.

Miller told the assembled crowd the decision to close Westpac’s historic branch was being reversed, with a new branch set to open in Moree, as the speartip of a trio of new branches the banking major was launching in regional Australia in the coming weeks.

Marking his 105th day in the top job, Miller said the nearly decade-long pullback from high streets was nearing its end, despite nearly 96 per cent of banking now being done online.

For the wealthy farmers, graziers and irrigators of Moree, many of whom have been multi-generational customers of Westpac, this was welcome news. Miller sees the opportunity in communities the bank vacated, with NAB and Commonwealth Bank the only remaining operators in the wealthy irrigation centre.

Westpac trails behind heavyweight NAB and European entrant Rabobank in the agribusiness market. But instead of re-entering its heritage listed art-deco branch, Westpac is instead setting up in the shell of the former ANZ branch. Smaller and less of a fixture than its old grand site, the new branch was welcomed by local grandees.

Miller said Westpac had been wrong to shut its doors, noting many agribusiness customers also wanted local retail banking, rather than drive-in, drive-out bankers.

“These communities want their presence in the community, and so I don’t think we gave that enough weight and that was the mistake we made,” he said.

Miller notes branch networks have been underappreciated, particularly in business banking, a growth area for the banking major.

Instead, the strategy to shut the branches was headed up by Westpac’s retail arm, which has largely moved online over the last decade.

“We have been a little binary … it’s either a proper full service branch or it’s not,” Miller said.

“I think what we’re doing now is just being more thoughtful about it. We’re going to come back into Moree, and we’re doing the full-service offering for customers in other centres as we go forward.”

Mr Miller on a cotton operation.

The decision to open the new branches in key regional areas, reopening Westpac’s branch in Leongatha, in Victoria’s Gippsland, along with an entirely new branch in Tasmania’s northwest Smithton, is clearly aimed at wining new agribusiness.

Mr Miller notes agribusiness is “really important” to Westpac, pointing to the significant opportunities for the bank to grow.

This comes as Westpac’s mortgage market, the bread and butter of retail banking, remains challenged as every other lender comes under pressure on margins as brokers squeeze returns.

Locals and Westpac staff also don’t miss the significance of Miller’s visit to Moree, a regional hub that commands the flatlands that run south of the Queensland border. One notes Westpac’s former boss Peter King seldom travelled so far from home.

King had pursued Westpac’s branch closures, as Westpac sought to close the distance on rivals amid a higher cost-to-income burden relative to other big four incumbents. But the bank is now banking on a big bang from its technology transformation, Project Unite, aimed at peeling off layers of complexity and double handling from systems, processes and platforms within the bank.

Miller notes Project Unite is also being felt in the business bank, despite its core focus being ridding Westpac of holdovers of several legacy acquisitions including the Virgin Money credit card business, or stacks of different technology platforms within the bank.

Westpac recently poached CBA’s Paul Fowler as its new business bank boss. But Westpac is also grappling with replacing its long-term head of retail banking Jason Yetton, who revealed he would quit the bank in coming months, after missing out on the top job to Miller.

Speaking after three hours of pressing the flesh with Moree locals, Miller was tight-lipped on the potential successor.

“We’ve met a number of really interesting and really impressive candidates,” he said. Miller said Westpac would announce that in the next “month or two”.

In the shearing shed.

The work for Westpac comes as the bank looks to exit years of risk remediation under the auspices of the Australian Prudential Regulation Authority.

APRA, which oversees the banking sector, recently warned rival ANZ had shown years of failures to get to grips with “non-financial risks”, slapping the bank with a $250m capital penalty, taking its total extra charge to $1bn.

Miller noted Westpac had made “really good progress” addressing the risk issues, but the recent hit at ANZ made Westpac wary of what else lurked within the bank. “It makes you think, have you got it right? Is there more to do?,” he said.

Miller, who previously ran the local arm of colourful financial giant Deutsche Bank, said he was constantly on watch. “Have I got the right people with the right skills setting the right standards in the company and making sure the culture is right?” he said.

ANZ recently secured a $2bn guarantee from the federal government for its Pacific banking operations. Miller notes Westpac was also in dialogue with the government over a similar deal to keep it in Fiji and Papua New Guinea, despite earlier attempts to exit the region being stymied by the PNG government.

He noted Westpac was reviewing a very similar deal to ANZ, but warned Westpac had to ensure its Pacific operations were “sustainable”. ANZ’s deal, and Westpac’s talks, come as the government looks to head off Chinese influence in the Pacific, amid global turmoil and troubles on the horizon from Trump America.

Miller said the recent tariff upsets showed the importance of not reacting to every headline. But he said it also showed the unsustainability of trade flows between the US and the rest of the world.

“They need to potentially see some rebalancing of the current trade flows,” he said.

“While we may not agree with how people have gone about it, the idea is that maybe certain trade imbalances need to be addressed and the US would like to work with countries to address that.”

This journalist travelled to Moree as a guest of Westpac

Originally published as Westpac back to basics with bush banking