SYDNEY, April 6 AAP – Westpac chief executive Brian Hartzer acknowledges public trust has been damaged by allegations of misconduct, but has rejected suggestions there should be a royal commission into the banking sector.
Mr Hartzer, whose bank this week became the second of Australia’s big four to be accused of interest rate manipulation, instead backed a call by Prime Minister Malcolm Turnbull for banks to clean up their own acts.
“We don’t support the idea of a royal commission: there have a very large number of inquiries – including a major financial system inquiry in the last couple of years – that have looked at many issues,” Mr Hartzer said in Sydney on Wednesday.
“We acknowledge that some of the incidents that have been described in the press do not reflect well on the reputation of the industry and the industry needs to do better.”
The corporate watchdog issued Federal Court proceedings against Westpac on Tuesday, alleging illegal manipulation of the bank bill swap rate that dictates the terms on which banks lend each other money.
The Australian Securities and Investments Commission has also alleged ANZ Bank engaged in manipulation of the swap rate.
Mr Hartzer said Westpac had done nothing wrong and would defend itself in court.
The bank boss spoke outside a function, held to launch a $100 million Westpac scholarship fund, that was attended by the prime minister.
Mr Turnbull said bank leaders needed to prioritise customer service and public wellbeing.
“The singular pursuit of an extra dollar of profit at the expense of those values is not simply wrong but it places at risk the whole social licence, the good name and reputation upon which great institutions depend,” he said.
Mr Turnbull called on banks to acknowledge taxpayer support received during the global financial crisis by making their conduct irreproachable.
“Many Australians are asking today: `have our bankers done enough in return for this support?'” he said.
“These questions are legitimate. Dismissing them as bank bashing misses the point.”
ASIC has named Westpac trader Colin Roden in a statement filed to the Federal Court, alleging trading in a manner intended to create an artificial price for bank bills on 16 occasions between 2010 and 2012.
The statement included transcript excerpts from what are said to be phone conversations between Mr Roden and a Westpac colleague.
The quotes appear to show Mr Roden claiming to have bought $14 billion of bank bills to drive down the bank bill swap rate and make a $12 million profit.
“I knew it was completely wrong but f*** it, I might as well. I thought f*** it. We’ve got so much money on it, we just had to do it.”
Mr Hartzer said Mr Roden remained employed by Westpac and had done nothing wrong.
“There are a lot of perfectly valid reasons why different kinds of trading go on at different times,” Mr Hartzer said.
“We think ASIC’s got it wrong and we will be vigorously defending it.”
Westpac shares closed down 45 cents, or 1.5 per cent, at $28.68.