Westpac abandons NZ sale plan

Westpac Group has shelved plans to spin-off or sell its New Zealand division following a strategic review.

Thursday, June 24th 2021, 9:38AM 3 Comments

David McLean

The Australian banking giant confirmed its decision to keep the NZ banking business on Thursday morning.

Peter King, chief executive of Westpac Group, said: "After a detailed review, we believe a demerger of the WNZL business would not be in the best interests of shareholders.

"Our review identified opportunities to improve service for customers and value across the WNZL business and we will progress these with the WNZL board and management team.

"WNZL is a strong business that has been serving New Zealand for 160 years. We remain committed to delivering for customers and fulfilling our purpose of helping Australians and New Zealanders succeed."

The proposal to sell or spin-off the NZ business was put on the table as a response to the Reserve Bank's new capital requirements, which will force the big four NZ banks to hold more capital aside.

Following its decision to keep its Kiwi division, Westpac said it would prioritise the appointment of a new NZ chief executive to replace David McLean, who retires on June 25.

Westpac New Zealand's GM of institutional and business banking, Simon Power, will become acting CEO following McLean's departure.

Tags: banks Westpac

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Comments from our readers

On 24 June 2021 at 12:45 pm Murray Weatherston said:

Possibly the alternative press statement that wasn't released.
Westpac has shelved plans to spinoff New Zealand operation because "we couldn't find anyone that might be prepared to pay the amount we would have needed."

On 24 June 2021 at 4:14 pm dcwhyte said:

Maybe some clues in these reported financials -

Cash earnings of $583m, up 98%

Core earnings of $709m, up 14%

Net operating income of $1,245m, up 7%

Operating expenses of $536m, down 1%

Impairment benefit of $99m, compared to an impairment charge of $211m in the prior comparative period

Net interest margin 2.06%, no change

On 25 June 2021 at 8:42 am Pragmatic said:

Another alternative press statement that wasn't released: Westpac has shelved plans to spinoff New Zealand operation after veiled threats against RBNZ's new reserve requirements were not taken seriously.

Or: Westpac has shelved plans to spinoff New Zealand operation after realizing the difficulties in replacing ridiculously high profits from other jurisdictions.

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