Westpac has suffered another big blow. Picture: Mark Metcalfe/Getty Images.
Westpac has suffered another big blow. Picture: Mark Metcalfe/Getty Images.

Fresh blow for scandal hit bank

Scandal-plagued Westpac was set to be one of the two major banks to offer mortgages under the federal government's first home loan deposit scheme. Only National Australia Bank has been announced as one of the major banks for the program, which allows low- and middle-income earners to get financing without a large deposit.

But Westpac was axed as the other bank in light of the money-laundering allegations it is currently facing according to bank insiders, The Australian reports.

Meanwhile, Labor has called for the bank to face a federal parliamentary economic committee in light of the allegations.

Westpac has been dropped as one of two big banks in the government’s first home loan deposit scheme. Picture: Mark Metcalfe/Getty Images.
Westpac has been dropped as one of two big banks in the government’s first home loan deposit scheme. Picture: Mark Metcalfe/Getty Images.

Westpac has been accused of 23 million money laundering breaches by Australia's money-laundering watchdog AUSTRAC, including some which may have funded child exploitation in Southeast Asia.

Now the coalition government will have to choose from either Commonwealth Bank or ANZ to join the scheme with NAB, giving the banks get access to 5000 eligible first home buyers per year each.

NAB recently settled a $50 million class action by customers who were sold junk insurance products.

Applications to the scheme would have to be made directly to the banks and NAB has promised not to charge them interest rates higher than those not taking part.

Westpac CEO Brian Hartzer resigned this week. Picture: AAP Image/Lukas Coch.
Westpac CEO Brian Hartzer resigned this week. Picture: AAP Image/Lukas Coch.

The scheme allows home buyers to only put down a five per cent deposit on the loans, with the National Housing Finance and Investment Corporation guaranteeing the rest of what would normally be a 20 per cent deposit.

CALL FOR PURGE

So far, the scandal has claimed the scalps of Westpac chief executive Brian Hartzer, whose imminent departure was announced yesterday, and chairman Lindsay Maxted, who will step down in 2020.

But now there are also increasing calls for more to be done.

Labor has called for the pair to front an inquiry into the crisis to discover how it arose in the first place.

Labor frontbencher Andrew Leigh, the deputy chair of the House of Representatives' Economics Committee, told the Sydney Morning Herald the body should investigate Westpac's breach in-depth.

"Westpac must answer for this unprecedented money-laundering scandal," he told the publication.

SHAREHOLDER REVOLT

Peter King has been named as Mr Hartzer's temporary replacement, but as he is due to retire in late 2020, uncertainty still remains.

The ongoing scandal has angered major investors and shareholders, with The Australian reporting a number of investors - including the Future Fund - are considering forcing a spill of Westpac's entire board unless more senior heads roll.

Major players are also demanding iron-clad guarantees similar child exploitation crises won't happen again.

According to The Australian, if more than one quarter of investors vote against the company in protest, a board-spill resolution would be on the cards in December.


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