Westpac has taken a $1.2 billion hit to its bottom line as the bank settles its debts – including $415 million in money laundering fines

Westpac has revealed a $1.22 billion hit to its full year earnings. (Steve Christo, Corbis via Getty Images)
  • Westpac has revealed its earnings will take a $1.22 billion hit, as it prepares its full-year results.
  • Nearly half of that was attributed to write-down in its insurance and auto financing businesses, while more than $400 million will be paid as part of its AUSTRAC fine.
  • Easing the pain was the sale of Westpac’s 10% stake in Zip, which netted the bank $300 million.
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Australia’s second-largest retail bank is bleeding cash at an extraordinary rate.

In a statement to the ASX on Monday, Westpac revealed its full-year earnings would take a $1.22 billion hit as it is forced to cover ever-mounting costs.

$415 million will go to resolving the AUSTRAC investigation that found Westpac contravened anti-money laundering and counter-terrorism financing laws (AML/CTF Act) a grand total of 23 million times.

Having allocated $900 million in anticipation last year, the fine eventually came in at $1.3 billion, a record even by corporate Australia’s standards.

The extra will meet the shortfall as well as pay AUSTRAC’s $4 million worth of legal fees, and remedy processes that Westpac will sorely hope prevent further “systemic failures”.

There’s an extra $182 million to foot the growing bill to remediate customers, for misdemeanours ranging from overcharging commissions to not disclosing fees.

In another lawyer’s picnic, Westpac’s have billed another $38 million for litigation and settlements.

An additional $406 million is being stripped from the bank’s life insurance business, $125 million from its auto financing arm, and $37 million due to COVID-19 and IT write-downs.

A range of other reevaluations racked up another lost $55 million, even after being partly offset by the $300 million Westpac made on the sale of its stake in Zip last week.

The attempt to air its dirty laundry comes ahead of its full-year results to be released on Monday next week.

Meanwhile, NAB has had to fork out $450 million of its own on Friday, as the big four try to settle their debts.