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Why Westpac Fell 3% Yesterday?

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

The Westpac Banking Corporation (ASX: WBC) share price dipped 3% yesterday to 25.67, placing it as one of the worst performers in the ASX200. Westpac is Australia’s second-largest bank and provides a range of consumer, business and institutional banking and wealth management services.

AUSTRAC has commenced civil legal proceedings against Westpac (ASX: WBC) regarding alleged breaches of anti-money laundering and counter-terrorism financing. Consequently, Westpac’s share price has fallen by 3%. (Credit: Small Caps)

The share price fall comes after the Australian Transaction Reports and Analysis Centre (AUSTRAC) commenced civil proceedings against the banking giant for alleged breaches of its Anti Money Laundering and Counter-Terrorism Financing Act. Westpac (ASX: WBC) had previously warned investors that it had self-reported failures to report a number of international funds transfer instructions (IFTIs). Furthermore, the banking giant revealed that AUSTRAC was also investigating numerous other areas within their processes, procedures and oversight.

Westpac CEO Brian Hartzer commented:

We are committed to assisting AUSTRAC and law enforcement agencies to stop financial crime. These issues should never have occurred and should have been identified and rectified sooner.

The fine may be as high as $210 per breach. However, when a large number of breaches are involved, the Federal Court has discretionary power to limit the fine. It is worth noting that Commonwealth Bank of Australia (ASX: CBA) paid a $700 million fine in 2018 for breaches of anti-money laundering and counter-terror financing law.

The investigation places heavy pressure on Westpac and their reputation, especially when considering their recent royal commission remediation. Furthermore, the potentially hefty fine may place a burden on their earnings, which may contribute to the underwhelming start to FY20, which has seen a near 10% fall in share price already.

The stock may now appear attractive to some investors, given its recent fall and strong fully franked dividend of 6.55%. However, it is foreseeable that the stock may continue its downward trend as this legal battle plays out.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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