Steven Gregg

Westpac Group has announced the appointment of Steven Gregg as a Non-executive Director and Chairman-Elect.

Mr Gregg is a seasoned leader with more than 35 years’ experience spanning chair, director and executive roles across a range of sectors. He will succeed outgoing Chairman John McFarlane, with his appointment as Non-executive Director and Chairman-Elect effective 7 November 2023, subject to regulatory approvals.

“Steven is the right leader to take Westpac into its next chapter,” said Mr McFarlane.

“With a long career in corporate and investment banking across Asia, Europe and the US, combined with his experience chairing ASX100 companies, Steven is a world-class executive and director who will bring a fresh perspective to the Board.

“He has deep experience chairing consumer-focused companies, a strong track record of disciplined decision making and contributions to board oversight of organisations undergoing technology transformation,” Mr McFarlane said.

Mr McFarlane will complete his term as Westpac Chair at this year’s AGM on December 14.

“When I took on this role in 2020, I made a commitment to shareholders to build a customer-focused digital bank and create a leaner, more agile and better performing company. We have made great progress in achieving these goals and turning Westpac around,” Mr McFarlane said.

“I’m confident that Steven will build on that success, working closely with Peter, the executive team and directors.”

Mr Gregg says he’s looking forward to joining the Westpac Board.

“It’s an honour to be appointed Chair of Westpac,” Mr Gregg said.

“Westpac is a wonderful company, the oldest company in the country, the first bank, and an organisation that has so much potential. I look forward to making a big contribution.

“From my observation, Westpac is in a period of transition. After the hard work of simplification over the past three years, now is the time to look forward and have a strong ambition.

“My priority will be working closely with fellow directors and the management team to deliver the very best service for our customers and better returns for our shareholders.

“There are so many things to look forward to at Westpac: working with a great team, taking the organisation to the next level and helping it move forward.

“It will be a privilege to succeed John McFarlane and build on the important work of the past few years,” Mr Gregg said.

In light of his appointment, Mr Gregg has rationalised his current director portfolio by retiring as a Non-executive Director of Challenger Financial Group Limited. Today he’s also announced he will retire as Chair and Non-executive Director of The Lottery Corporation in the first quarter of the 2024 calendar year.

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Mr McFarlane said the Board and Mr King have had recent discussions and Mr King confirmed he is committed to the multi-year plan to turn the company around. Reflecting these discussions his employment contract has been amended to a standard 12-month notice period.

“In the short time Peter has been CEO, he has made a significant contribution to Westpac, in a year of unprecedented change,” Mr McFarlane said.

“He has guided Westpac through the challenges of COVID-19 as well as settling the AUSTRAC matter.

“His strategy reset is already driving fundamental change to how the company operates with clearer accountability, faster decision making and a focus on improving risk management. He has also refreshed the Executive Team and refocused the Bank on its core markets and products.

“Given the program of work underway, we are delighted to have leadership continuity,” Mr McFarlane said.

Mr King said: “It is a privilege to lead Westpac. While I am pleased with what we have achieved over the last six months, we have a significant agenda ahead that requires a longer-term commitment than two years. I am determined to see Westpac return to a leadership position.”

Mr King’s contract terms remain unchanged, except for the removal of the 2-year term.

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Westpac Chairman, John McFarlane said, “We are delighted to welcome Mike to the Board and will benefit greatly from his board experience and deep knowledge of financial services.”

Mr Hawker was Chief Executive Officer and Managing Director of Insurance Australia Group (IAG) from 2001 to 2008. Prior to IAG, Mr Hawker held executive positions with Westpac, including Group Executive, Business and Consumer Banking between 1998 and 2001, and prior to that was Executive Director of Citibank International in Europe and Deputy Managing Director of Citibank in Australia.

Mr Hawker said, “I am looking forward to working with John and the Board as the Group navigates a unique banking environment.”

Mr Hawker will be an independent Non-executive Director and will become a member of the Board Legal, Regulatory & Compliance Committee and Board Technology Committee upon his appointment.

Westpac has also announced that Alison Deans has decided to retire from the Board at the conclusion of the 2020 Annual General Meeting.

Ms Deans joined the Board in 2014 and in that time has served on various Committees including the Board Risk, Remuneration, Nominations and Technology Committees.

Mr McFarlane said, “Alison has made a significant contribution to the Westpac Board and has been an outstanding shareholder representative. In addition to her sound judgement, Alison has provided particular leadership and insights through her role as Chair of the Board Technology Committee in a period of significant technological change. On behalf of the Board I would like to thank Alison for her commitment to Westpac and shareholders and I wish her well for the future.”

Ms Deans said, “It has been a privilege to serve on the Westpac Board. I wish Westpac every success as it continues to make the changes needed to simplify and strengthen the Bank.”

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John McFarlane

Westpac has announced the results of its investigation into the Anti-Money Laundering and CounterTerrorism Financing (AML/CTF) compliance issues, as well as releasing the Advisory Panel Report into Board Governance of AML/CTF Obligations and the Promontory Assurance letter on management’s accountability review.

Westpac Chairman Mr John McFarlane said, “In line with the Board’s commitment at the 2019 AGM, we are now making public the results of reviews into the Bank’s AML/CTF compliance failings.

“It’s been my experience since joining the Bank that Westpac deeply regrets this matter. Indeed, recognising the seriousness of the issues raised by AUSTRAC, the former CEO stepped down and the former Chairman brought forward his retirement.

“We are all committed to fixing these issues so they don’t happen again.”

The failure concerning International Funds Transfer Instructions (IFTIs) non-reporting occurred due to a mix of technology and human error dating back to 2009.

The failure properly to adhere to AUSTRAC guidance for child exploitation risk in respect of some products occurred due to deficient financial crime processes, compounded by poor individual judgements.

We have identified three primary causes of the AML/CTF compliance failures:

• Some areas of AML/CTF risk were not sufficiently understood within Westpac;
• There were unclear end-to-end accountabilities for managing AML/CTF compliance; and
• There was a lack of sufficient AML/CTF expertise and resourcing.

With regard to Board oversight, the Advisory Panel formed a range of views on financial crime related governance. The Report noted that the way in which the Westpac Board organised its general governance responsibilities was mainstream and fit for purpose. The Report also noted that, with the benefit of hindsight, and noting the Board’s escalating focus in the area, directors could have recognised earlier the systemic nature of some of the financial crime issues Westpac was facing. The Panel also noted that reporting to the Board on financial crime matters was at times unintentionally incomplete and inaccurate.

Westpac CEO, Mr Peter King said the management accountability assessment, conducted with external assistance, looked back over ten years and where fault was identified, appropriate action has been taken.

Consequences that have been applied to individuals include significant remuneration impacts and disciplinary actions. A number of relevant staff had already left the company.

“A range of remuneration consequences were applied to 38 individuals. Consequences applied to prior year awards, including withheld FY19 short term variable reward, totalled approximately $13.2 million1. In addition, cancelled FY20 short term variable reward, including for the CEO and Group Executives, is valued at approximately $6.9 million assuming an outcome of 50% of target opportunity.

“Remuneration and disciplinary actions took into consideration decisions already taken and announced, the level of direct managerial responsibility or accountability for the compliance failures, and the level of culpability for failings.

“While the compliance failures were serious, the problems were faults of omission. There was no evidence of intentional wrongdoing,” Mr King said.

Mr McFarlane said Westpac’s remediation program focused on strengthening all aspects of nonfinancial risk management.

“We accept the recommendations of the Advisory Panel report and we are implementing them as part of the remediation plan, which is already well advanced.

“We have established a new Board Legal, Regulatory & Compliance sub-committee, appointed a deeply experienced executive to a new Executive position directly responsible for financial crime compliance, and made a number of other organisational changes.

“We will have no tolerance for controllable negative events. Our transformation program has begun and will bring deep cultural change,” Mr McFarlane said.

Mr King also acknowledged the need for cultural change within the Bank.

“We recognise we need to change. We completely accept that some important aspects of Westpac’s financial crime risk culture were immature and reactive, and we failed to build sufficient capacity and experience in some important areas,” Mr King said.

“We have learned from this and are absolutely committed to making amends for this event.”

Mr McFarlane said Westpac’s investigations had now concluded and Westpac would continue to engage with AUSTRAC on the legal process, following the submission of its defence and admissions on 15 May 2020.

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John McFarlane

Westpac Group has announced the appointment of Mr John McFarlane to the Westpac Board as Non-Executive Director and Chairman-Elect, succeeding Lindsay Maxsted on 2 April 2020.

Mr McFarlane will commence his role as Non-Executive Director in February, subject to regulatory approvals.

Mr Maxsted said, “Mr McFarlane is not only well known in Australia and New Zealand, but is a respected banking leader globally who brings to our organisation more than 44 years’ experience in financial services. He has worked across retail and wholesale banking and markets, as well as in life and general insurance, and has board and public service experience in this and other fields.

“Over the past 27 years he has been a main board director of five of the world’s leading financial institutions, including as executive and non-executive chairman, chief executive and executive and non-executive director roles. He has a proven track record in delivering results, along with cultural and organisational change.

“Most recently, Mr McFarlane was Chairman at Barclays in London, which after the global financial crisis underwent a decade of challenge. During his four years as Chairman, the company was streamlined, repositioned and has sustainably returned to profit. Prior to this, he delivered a successful turnaround program at UK insurer Aviva, a company similar in scale to Westpac.

“Mr McFarlane is passionate about driving progress in the banking industry. He was Chairman of TheCityUK, the UK’s coordinating financial services body, which accounts for 11% of UK GDP and represents the interests of more than 1.3 million employees.

“In addition to his global career, Mr McFarlane brings a deep understanding of Australia’s banking sector, including delivering significant value at ANZ over his 10-year tenure as CEO, which also included 10 years as a Director of the Australian Bankers’ Association, two as Chairman.

“This experience, coupled with his strong customer and employee focus, will be invaluable to Westpac as the organisation executes its strategy and implements its Response Plan for the AUSTRAC Statement of Claim.

“As Chairman-Elect, Mr McFarlane will be responsible for appointing a permanent CEO, with an internal and external search process currently underway. In the interim, he will work closely with the Acting CEO, Peter King and the Board, to effect needed change,” Mr Maxsted said.

Mr McFarlane said it was an honour to become Chairman of Australia’s oldest company and one so pivotal to the Australian and New Zealand economies.

“People close to me know that on my return to Australia, I hadn’t intended to take another major leadership role. However, I’m passionate about the Australian banking sector, and I’m excited by the challenge of returning Westpac to its place as a leading global bank, following recent events.

“To some extent, the internal and external challenges ahead for Westpac are not dissimilar to those in my last five financial institutions, and I have therefore grown comfortable about my capacity to work with the Board and management to effect the necessary change. Nevertheless, I’m sufficiently battle-hardened to realise things can be tougher than you think and that in banking, nothing is ever certain.

“My focus initially will naturally be on resolving the company’s current issues but equally important, to position it as quickly as possible for long-term success. Fortunately, Westpac has wonderful core customer franchises, each with significant opportunity.

“The appointment of a world-class CEO can take time. In the interim, momentum is important. I will work closely with Peter King and the Board to continue to make any changes necessary. People should expect to see positive change during this period.

“I also realise that success isn’t only as a result of the efforts of current incumbents, but to the foundations laid over time by our predecessors. In this respect, I would like to pay particular thanks to Lindsay Maxsted for his significant contribution to the company and am proud to take over the role from a leader of his calibre.

“We will work closely over the next two months to ensure an orderly transition. However, we both wanted to move quickly with this announcement to provide certainty to the market and to assure it of our joint commitment to the success of the company,” Mr McFarlane said.

Mr McFarlane has returned to live in Australia permanently.

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