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Westpac to explain royal commission backflip to investors

Westpac chairman Lindsay Maxsted is likely to face questions about the banking royal commission at its annual meeting on Friday. Photo: Pat Scala Westpac chairman Lindsay Maxsted is likely to face questions about the banking royal commission at its annual meeting on Friday. Photo: Pat Scala

Westpac chairman Lindsay Maxsted is expected to explain to shareholders why the bank suddenly changed its tune on a royal commission at its annual meeting on Friday.

As the industry steels itself for the powerful inquiry, including by appointing senior barristers, Mr Maxsted and chief executive Brian Hartzer will be the first senior leaders from the big four to face public questions on the royal commission when they front the meeting in Sydney.

One week before Mr Maxsted and Mr Hartzer co-signed a letter to Treasurer Scott Morrison supporting an inquiry, Mr Maxsted had warned that the signal to global markets from holding a royal commission would be "very dangerous."

On Friday, Mr Maxsted is expected to acknowledge the bank's change of heart, and argue it was in the national interest to end the uncertainty by holding an inquiry.

In putting their support behind a royal commission, senior bankers were also hoping it would stop banks being used as a political football, after facing a series of new regulations and a new tax in the past year.

Mr Maxsted is also expected to acknowledge the decline in public trust in banks, and re-iterate the industry's view that the inquiry can help to restore confidence in the sector.

Institutional investors are expected to support Westpac's remuneration report, which delivered Mr Hartzer total pay of $6.7 million, the highest of the bosses of the big four banks.

The Australian Shareholders' Association, however, said it would vote against Westpac's remuneration report because of concerns about how it valued the share incentives paid to senior executives.

The meeting comes as the government continues to work on its draft terms of reference for the inquiry, to be led by former High Court judge Kenneth Hayne. The government has not yet provided key details about the inquiry, which industry sources believe will be based in Melbourne.

Banks had already assembled internal teams and hired law firms in anticipation of a royal commission, with Westpac retaining Allens and Gilbert & Tobin, as well as barrister Matthew Darke SC, who is representing the bank in its court case over interest rate rigging allegations.

ANZ Bank has retained Ashurst, National Australia Bank has signed up Herbert Smith Freehills and Commonwealth Bank has Clayton Utz.

This article was first published by https://www.brisbanetimes.com.au/
Author: Clancy Yeates - Clancy Yeates writes on business specialising in financial services. Clancy is based in our Sydney newsroom.
Last modified onThursday, 07 December 2017 22:27

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