© Reuters. Australia’s Westpac Banking Corp’s CEO Brian Hartzer speaks during a media conference in Sydney, Australia

By Niyati Shetty

(Reuters) – Westpac Banking Corp (AX:) said on Tuesday Chief Executive Brian Hartzer will step down and Chairman Lindsay Maxsted will bring forward his retirement, as the country’s biggest money-laundering scandal rocks Australia’s No.2 retail bank.

Financial crime regulator AUSTRAC last week accused Westpac of 23 million breaches of anti-money laundering laws, including allowing payments between known child exploiters, triggering calls for Hartzer’s resignation.

Australian Prime Minister Scott Morrison had called on the bank’s board to consider the CEO’s future, and along with Home Affairs Minister Peter Dutton and Attorney General Christian Porter joined investors, analysts and human rights campaigners in criticizing Westpac for enabling the payments at the center of the crisis.

“We sought feedback from all our stakeholders including shareholders and having done so it became clear that Board and management changes were in the best interest of the Bank,” Maxsted said in a statement.

Maxsted confirmed he will bring forward his retirement to the first half of 2020.

The departure appears to be an abrupt change of mind for Hartzer, who the previous day canceled end-of-year parties but assured staff “this is not a major issue”, according to The Australian newspaper.

In interviews with local media at the weekend, Maxsted had said firing Hartzer during the crisis would be destabilizing for the company.

Hartzer has been with the company for more than seven years, taking over as CEO and managing director in 2015.

Chief Financial Officer Peter King will take over as acting CEO of Australia’s oldest bank, effective Dec. 2. The bank has an annual general meeting scheduled for Dec. 12.

Westpac shares closed down 1.3% on Monday, taking the total losses to about A$7.5 billion off market capitalization in the four days of trading since the lawsuit was announced.

A Westpac spokesman was not immediately available for a comment on Tuesday.

FINANCE SECTOR CASUALTIES PILE ON

Hartzer’s resignation is the latest in a long line of executive departures from a financial sector that has been under heavy scrutiny since a bruising public inquiry found rampant profiteering in the industry.

Larger rival Commonwealth Bank of Australia (AX:) was accused of similar breaches by AUSTRAC in 2017, resulting in a record A$700 million penalty and prompting the bank to bring forward its CEO Ian Narev’s retirement.(https://reut.rs/2O7qakK)

Financial planner AMP Ltd (AX:) lost its CEO, chair and several board members during the Royal Commission inquiry over accusations of doctoring a supposedly independent report to a regulator, while wealth manager IOOF Holdings (AX:) lost its CEO and chair over accusations in the inquiry of improperly using retiree money to prop up investment losses.

A separate legal action by a regulator found the IOOF bosses had not broken any laws.

In February, soon after the Royal Commission final report was published, the CEO and chair of No. 3 lender National Australia Bank (AX:) stood down after being singled out in the document for failing to accept responsibility for the bank’s wrongdoings.

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2019-11-25