Westpac New Zealand Unit Ordered to Review Risk Management -- Update
By Alice Uribe and Jack Hagel
SYDNEY -- Westpac Banking Corp. said it is considering a
demerger of its New Zealand business after regulators there ordered
it to review its risk management.
The major Australian bank on Wednesday said that it is in a very
early stage of its assessment and that no decision has been made
yet. The lender said the impact of the risk-management reviews,
ordered by the Reserve Bank of New Zealand, will be one
consideration in its decision.
"The business continues to perform well with a strong position
in retail and commercial banking," Westpac said in a statement.
"However, given the changing capital requirements in New Zealand
and the RBNZ requirement to structurally separate Westpac's NZ
business operations from its operations in Australia, it is now
appropriate to assess the best structure for these businesses going
The Reserve Bank of New Zealand on Wednesday said it ordered the
Westpac unit to commission independent reports addressing concerns
the central bank has expressed about the unit's risk governance
processes and practices.
"We have experienced ongoing compliance issues with Westpac NZ
over recent years, most recently involving material failures to
report liquidity correctly, in line with the Reserve Bank's
liquidity requirements," Geoff Bascand, the central bank's deputy
governor and general manager of financial stability, said in a
statement. "Furthermore, the bank has continued to operate outside
of its own risk settings for technology for a number of years."
The central bank also required the unit to provide a separate
independent report assuring the effectiveness of actions taken to
improve the management of liquidity risks.
It said it would increase the amount of liquid assets the unit
is required to hold until the central bank is satisfied with the
unit's remediation efforts. The reserve bank also said that the
Westpac unit's current liquidity and funding positions are sound
and that the bank is well capitalized. It added that Westpac has
worked to address the root causes of compliance issues related to
Westpac said it would provide further updates as required.
Write to Alice Uribe at email@example.com and Jack Hagel at
(END) Dow Jones Newswires
March 24, 2021 15:52 ET (19:52 GMT)
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