|Bid||25.65 x 110000|
|Ask||25.95 x 60000|
|Day's range||25.72 - 26.05|
|52-week range||25.12 - 32.39|
|Beta (5Y monthly)||0.61|
|PE ratio (TTM)||10.44|
|Forward dividend & yield||1.67 (6.44%)|
|Ex-dividend date||12 Nov 2019|
|1y target est||38.40|
The boss of Australia's Westpac bank quit on Tuesday (November 26), over a money laundering scandal involving child exploitation. Just a day earlier Brian Hartzer had said the allegations were 'not a major issue', and he intended to stay on. Regulator AUSTRAC last week launched legal action against the lender. It's accused of enabling laundering, including offshore payments to paedophiles. The bank intially resisted calls to fire top executives, but the political pressure rapidly mounted. Australian Treasurer Josh Frydenberg spoke Tuesday after Hartzer's departure: (SOUNDBITE) (English) AUSTRALIAN TREASURER, JOSH FRYDENBERG, SAYING: "Twenty-three million alleged breaches of our anti-money laundering laws and Austrac has said that there was a level of indifference by senior management, a lack of appropriate oversight by the board and a systemic failure by the bank." The alleged payments date back more than five years. Larger rival Commonwealth Bank of Australia is accused of similar breaches, but far fewer in number. Its CEO has already stepped down, and the firm paid a record fine of 700 million dollars - about 475 million U.S. dollars. Westpac shares rose about 1.7 percent Tuesday, having slumped about 8 percent since AUSTRAC announced its lawsuit.
“Mack the Knife” is back in town. When Barclays and Aviva were in turmoil in the UK, John McFarlane jumped in as chairman and overhauled them. Now another Aussie lender, Westpac, will taste the Scotsman’s cold steel.
Westpac has turned to former Barclays chairman John McFarlane to lead the Australian bank as it deals with the aftershocks of a huge money-laundering scandal. The country’s second biggest lender by market capitalisation said in a stock exchange statement on Thursday that Mr McFarlane, known for his unflinching approach to corporate restructurings, would replace Lindsay Maxsted as chairman from April 2. Westpac of not adequately monitoring and reporting A$11bn ($7.5bn) in suspicious transactions that included transfers related to potential child exploitation.
(Bloomberg) -- Companies around the globe, concerned that heightened tensions between the U.S. and Iran could roil bond markets, are rushing to borrow cheaply while they still can.Investment-grade firms have sold more than $61 billion of notes in the U.S. through Thursday, double the same period in 2019. In Europe, investment-rated and junk bond sales including company and country debt broke a 79 billion-euro ($88 billion) weekly record set a year ago. Borrowers from around the Asia Pacific region sold more than $28 billion in dollar notes this week, in a record start.Companies have reasoned that it makes sense to sell bonds now when conditions are still good and demand is strong. If the Iran situation were to worsen and sentiment turn, then borrowers “may end up paying more and demand for riskier assets will wane,” said Alex Eventon, a fund manager at Resco Asset Management.“No matter what comes next conditions are likely to be less good than they are now,” Eventon said.The high volume of U.S. investment-grade bond sales this week could translate to slower activity later in January, which is typically one of the busiest months of the year for borrowing. Wall Street strategists broadly expect blue-chip companies to sell around 5% fewer dollar-denominated bonds this year than last year on a gross basis, as they cut their overall debt levels and take advantage of comparatively lower yields in Europe. And in the near term, many companies are close to posting quarterly results, which limits how much debt they can sell for now anyway.Some of the major issuers this week in the U.S. included American Tower Corp., a company that leases out space on cellphone towers, which sold $1.5 billion of notes in two parts. Among issuers from APAC, Westpac Banking Corp. and Nomura Holdings Inc. led a handful of multi-billion dollar deals, with a large swathe of Chinese companies also selling. In Europe, a flood of bank deals materialized, including a 1.25 billion-euro sale from Italy’s UniCredit SpA.“Investor demand has been at, or close to, record levels in many instances,” said Lee Cumbes, a managing director in debt capital markets at Barclays Plc in London.Strong DemandThat demand is evident globally. In the U.S., money managers this week put in orders for far more bonds than companies were selling, and yields on new notes are almost equal to companies’ existing debt, instead of being higher.Demand is so strong that even companies with some of the lowest credit ratings, which might have struggled to borrow for much of last year, have been able to tap the market. Transocean Ltd., an offshore oil driller, sold $750 million of junk bonds on Wednesday. The notes carry a Caa1 rating from Moody’s Investors Service, putting them in the lowest tier of debt that companies typically issue. S&P Global Ratings has the securities the equivalent of one step higher at B-.The reason for the strong issuance levels globally is clear, money managers said.“As long as the market is open and investors are ready to buy, there’s always the potential for more uncertainty out there if you decide to hold off,” said Bob Summers, an investment-grade portfolio manager at Neuberger Berman in Chicago. “If a company has all its documentation lined up and ready to go, there’s really no reason to wait.”Escalation, De-escalationTension between Iran and the U.S. intensified last week after the U.S. killed Qassem Soleimani, a top Iranian general. U.S. President Donald Trump tweeted that Soleimani was planning to kill Americans. Iran vowed revenge, and fired missiles at two U.S. bases in Iraq on Wednesday. The attacks caused no casualties, and Trump on Wednesday appeared to shift away from talk of war. It’s unclear if Iran is done with reprisals, but investors are less worried about the conflict, and U.S. stocks are reaching fresh records.The U.S. investment-grade market is coming off a year with gains of 14.5%, according to Bloomberg Barclays index data, and only six weeks of retail outflows for all of 2019, according to Refinitiv Lipper. Yields are just 2.86% on average, hovering near lows last seen in mid-2016. Risk premiums are near the tightest levels in almost two years.New notes have traded well in the secondary market so far, a sign that investors still have money to put to work, building on last year’s momentum, according to Stacey Starner McAllister, head of investment-grade fixed-income research at Eaton Vance Corp.“Maybe investors are less concerned about Iran and geopolitical factors than issuers are,” she said. “We’re always talking about those potential risks, but right now it’s not changing our base-case outlook for credit for the year.”(Updates issuance number in second graph, adds details.)\--With assistance from Rizal Tupaz, Priscila Azevedo Rocha, Tasos Vossos and Finbarr Flynn.To contact the reporters on this story: Molly Smith in New York at firstname.lastname@example.org;Michael Gambale in New York at email@example.com;Hannah Benjamin in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Nikolaj Gammeltoft at email@example.com, Dan WilchinsFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
For many investors, the main point of stock picking is to generate higher returns than the overall market. But if you...
(Bloomberg Opinion) -- For decades now, Australian banks have been a class apart.Thanks to a ceaselessly growing economy, an oligopolistic structure that prevents mergers between the big four lenders, and the loyalty of self-funded retirees who play a large part in the local stock market, they’ve been valued as if they’re in a fundamentally different business from counterparts in other countries.At their peaks, Commonwealth Bank of Australia, Westpac Banking Corp. and Australia & New Zealand Banking Group Ltd. were all priced at more than three times book value. That’s extraordinary in an industry where the share price should tend to cleave fairly close to the value of net assets, and where the median valuation among large banks in developed markets is 0.77 times book.(1)Tuesday’s announcement that Westpac Chief Executive Officer Brian Hartzer has resigned after the company was accused of 23 million separate breaches of money-laundering regulations should be a wake-up call. While valuations have slipped in recent years thanks to a teetering housing market and a government inquiry into the sector, Australia’s banks still have further to fall.If you look at them in terms of return on equity, the big four are distinctly middle-of-the-road. All are around the median deciles relative to their peers in other countries except for Commonwealth Bank, with National Australia Bank Ltd. somewhat below the midpoint. Switch to price-book measures, though, and they’re close to the top of the pack, with the Commonwealth at number three in the world.The best explanation for this is probably their reputation as excellent dividend payers. Given the vast uncertainties around bank earnings due to regulatory requirements and the fuzziness of working capital and capital expenditures, dividends are often regarded as the most solid basis for a real understanding of a bank’s future cashflows. Given that shareholders are ultimately paying for a right to a slice of those cashflows, it’s natural that banks with above-average dividend yields should have above-average valuations, too.Australia is relatively exceptional on that front. All of the big four barring the Commonwealth are in the second-highest decile among their peers in terms of analysts’ estimates for blended-forward 12-month dividend yields. Combined with the fact that Australia’s army of affluent retirees show an unusual loyalty to household-name blue-chip companies that pay a reliable income stream of shareholder returns, it’s little wonder the sector is outperforming.There’s a problem on the horizon, though. As Bloomberg News’s Emily Cadman has written, the dividend party could be coming to a close. Payouts have already been reduced at Westpac and National Australia Bank, and ANZ has cut the amount eligible for tax refunds, as the big banks have been forced to set aside more capital by the regulator.Such balance sheet reinforcement should at least be a temporary measure, but even once they’re paid there are further risks to cashflows. Australia’s economy is slowing, as my colleague Daniel Moss has written.Interest rates, as measured by three-month interbank benchmarks, look closer to those in the U.K. than the country’s bank valuation peers in the U.S. and Canada. That’s likely to have a rough knock-on effect on earnings, given the tight relationship between borrowing costs and net interest margins, a key determinant of bank profits.Even if the current rebound in the housing market translates into a more sustained upswing, there are challenges. Any banks wanting to take advantage of that by lending more aggressively are going to need to find a way to attract more deposits, which will put further pressure on interest margins given the low rate environment.All of that should serve to reduce the reliability of those dividend payouts — and without that, Australia’s retirees may find there are other blue-chip businesses worthy of investment.Westpac shares have reacted positively to the news of the clean-out at the top of the bank, but don’t expect the big four to find recovery from their malaise easy. Australia’s banks have been cash machines while the economy prospered. As it struggles to relight the fire that powered it for the past three decades, that money could be drying up, too. (1) We've confined our universe to banks with more than $100 billion in assets in North America, Western Europe and developed Asia-Pacific markets.To contact the author of this story: David Fickling at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Australian shares extended losses on Thursday, pulled down by Westpac Banking Corp as accusations of money laundering breaches against the lender rattled the financial sector, which has been in regulatory crosshairs for nearly two years.
(Bloomberg Opinion) -- After a 14-month inquiry that resulted in the departures of two chief executive officers and two chairmen, you might think Australia’s financial services industry would have cleaned up its act. The anti-money-laundering agency just provided 23 million reasons why you’d be wrong.Austrac applied Wednesday for civil penalties against Westpac Banking Corp., the country’s second-biggest lender, for allegedly contravening laws on money-laundering and terrorism financing 23 million times. Most concerning was the agency’s claim that Westpac failed to do due diligence on 12 customers whose transaction activity was “indicative of child exploitation risks.”“Some of the undetected transactions involved payments to alleged or suspected child exploitation facilitators,” Austrac wrote in a summarized statement of claim. “One customer opened a number of Westpac accounts after serving a custodial sentence for child exploitation offences.”Such a pattern of alleged lapses is extraordinary. It’s more than two years since Westpac’s larger rival, Commonwealth Bank of Australia, faced a similar money-laundering case from Austrac, and the entire banking sector was in the dock for the duration of the Hayne Royal Commission, the government inquiry into the finance industry that finally wrapped up in February.Westpac came out of that inquiry with only a qualified pass. The tardiness in shedding its wealth business drew criticism, due to the potential for conflicts of interest. While Chief Executive Officer Brian Hartzer didn’t come in for the stinging censure that led to the departure of National Australia Bank Ltd.’s chairman and chief executive, Commissioner Kenneth Hayne was notably skeptical about whether he’d really turned over a new leaf.The long boom in the Australian economy has led executives to ignore what retail banking is meant to be about. Every bank wants to make life easy and friction-free for customers, but it’s precisely the friction embodied in know-your-customer and anti-money-laundering regulations that stops banks becoming conduits for illicit cash.Commonwealth Bank’s problems with Austrac stemmed from the introduction of deposit-taking ATMs that were wide open to abuse by money-launderers. In Westpac’s case, its LitePay international payment service appears to have played a similar role. Senior management were briefed on risks from payments to the Philippines and Southeast Asia over LitePay in June 2016, according to Austrac, but only got around to implementing an automated system to spot transactions connected with child exploitation two years later. To this day, some non-LitePay payment channels still lack such automated detection systems, according to Austrac.Identifying and preventing the funding of child exploitation should be among the most basic tasks of major banks. As anyone who’s been unable to withdraw cash at an overseas ATM knows, automated screening is capable of picking up abnormal activity in the smallest amounts. It’s astonishing that, at a time when the behavior of Australia’s banking sector was under unprecedented scrutiny, Westpac should have failed to implement controls on transactions with high-risk correspondent banks and do proper child exploitation due diligence on its own customers.Westpac is already suffering. Earlier this month it announced a A$2.5 billion ($1.7 billion) capital raising and cut its dividend after its key profit measure fell 15%. Despite a surprising pickup in house prices in recent months, the buy-to-let investors who have driven the market for years are showing little demand for new mortgage credit, crimping the bank’s most important business. Its price-to-book ratio isn’t quite as low as it was a year ago when the Hayne inquiry was approaching its climax, but it’s closing in on those levels.Former Commonwealth Bank Chief Executive Ian Narev announced his departure less than two weeks after news of that bank’s Austrac scandal broke in 2017, and his successor Matt Comyn has spent most of the past two years in an extended and radical cleanup. To remain in the top job at Westpac, Hartzer will have to persuade shareholders and directors that a similar change of heart is finally under way. To contact the author of this story: David Fickling at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
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