Australian banks are battling for credibility

Bloomberg

Brian Hartzer succumbed to the inevitable and resigned as Westpac Banking Corp chief executive officer, forced out by an investor backlash over allegations the lender committed the biggest breach of money-laundering laws in Australia’s history.
The 52-year-old becomes the third of Australia’s big-four bank CEOs to be undone by scandal in the past two years. The laundering suit, including allegations Westpac was used to funnel money to child pornographers in the Philippines, shines a spotlight yet again on governance failures in an industry lambasted earlier this year for a runaway culture of greed and poor
behaviour.
“Culture is a huge issue across the Australian banking sector,” said Steve Johnson, chief investment officer at Forager Funds Management Ltd in Sydney. “Despite everything that’s happened over the last three years, they haven’t recognised that there is a systematic problem here, rather than individual instances of things going wrong.”
Hartzer joins an unenviable list of bank executives from around the world who’ve been ousted over compliance failures, with Danske Bank A/S and Swedbank AB removing their CEOs amid dirty-money probes and Wells Fargo & Co CEO Tim Sloan departing over a range of scandals including fake customer accounts.
After largely escaping the opprobrium heaped on US and European counterparts a decade ago in the wake of the global financial crisis, Australia’s banks now face their own uphill battle to restore their shredded credibility.
“We’ve sailed through pretty well, and now it almost feels like a bit of a delayed reaction and things are surfacing now,” said John Pearce, chief investment officer at UniSuper, whose fund manages A$80 billion ($54 billion) in pension savings.