It made this clear in a disclosure statement to the Stock Exchange on Monday, which related to the financial year ending September 30.
The problems referred to in the statement date back to directives made to Westpac by the RBNZ 20 months ago.
One of them required the bank to make sure its Board of Directors could manage risk effectively. To ensure this was done, Westpac contracted the international consultancy Oliver Wyman Ltd to assess the bank's risk containment methods, and was informed of deficiencies as a result.
“The Bank has a programme of work underway to address the issues raised, which is being overseen by the bank’s board,” Westpac said in the latest statement.
“The Bank has engaged Oliver Wyman to provide independent assurance that the Bank’s remediation has been delivered to an appropriate standard. The Bank is making good progress with this programme of work.”
A second issue related to previously identified breaches of the Reserve Bank’s liquidity policy for High St banks.
This matter was investigated by Deloitte Touche Tohmatsu and completed in May.
In its disclosure statement, Westpac said the review found that the Bank had improved its liquidity control, and it did not identify any material control gaps, though it made some recommendations for improvement, which were being implemented.
In the early days of this dispute, the RBNZ required that Westpac discount the value of its liquid assets by approximately 14% below their previous valuation.
It did that even though it said the bank's funding was sound.
The RBNZ policy had the effect of increasing the amount of cash, or cash-like assets, that Westpac needed to hold. But after the work was done, this discount was reduced from 14% to 7%.
The Westpac statement said this level of discount would remain in place until the RBNZ was satisfied that control assurance work had been completed.
The state of Westpac technology was another problem which was identified early on. As a result, the Bank made commitments to the RBNZ and to the Financial Markets Authority (FMA) that it would address its technology issues.
It then engaged Deloitte to monitor progress and acknowledged in its disclosure statement that the job was not yet done.
“While work has been underway to address these issues for some time, more work is required to meet the bank's expectations and those of the regulators,” Westpac said in its disclosure statement.
It did not give details of what aspects of its technology needed improvement.
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