The news on Monday that Westpac (ASX:WBC) CEO Peter King is set to retire later this year (after overseeing the 2023-24 annual results in early November) definitely took investors by surprise.
The shares dipped 2% at one stage and ended the day down 0.8%, with the market cap dropping by half a billion dollars.
Some of that weakness was due to the sell-off here, flowing from Wall Street’s bad Friday. However, shares in rivals Commonwealth Bank, ANZ, and NAB were also down—by less than 1%—while Westpac’s slide was the biggest among the top four.
Westpac announced King’s departure and his successor in a curious fashion.
His successor, Anthony Miller, was named a paragraph before King’s retirement was revealed. This was contrary to the usual way of making such announcements, where the CEO’s retirement is disclosed first, followed by the replacement’s name.
It was also odd that Westpac seemingly downplayed King’s five years of leadership. He had righted a badly listing ship when he took over at the start of the pandemic, and in the aftermath of the findings of the Banking and Financial Royal Commission.
During those five years, King oversaw Westpac’s comeback from the 23 million breaches of anti-money laundering regulations and the bad publicity from the Hayne Banking and Financial Royal Commission.
The money laundering breaches cost Westpac a record $1.3 billion fine from AUSTRAC, the financial intelligence agency. APRA, the main banking regulator, also imposed a $1 billion capital overlay penalty on Westpac, which was cut by 50% in July, recognising the bank’s improvement.
King’s successor is Anthony Miller, who joined the company in 2020 and was serving as the Chief Executive of Westpac’s Business & Wealth division. He has also held senior roles at several other banks, including Goldman Sachs and Deutsche Bank.
King, who had been the Chief Financial Officer, was appointed as the acting Chief Executive from December 2019 until March 2020, transitioning to a permanent role in April 2020, around the onset of the COVID-19 pandemic.
He secured the role after the former CEO, Brian Hartzer, and Chairman, Lindsay Maxsted, were forced out in late 2019 following AUSTRAC’s revelation of the 23 million breaches of anti-money laundering and anti-terror laws by the bank.
King was the most senior “cleanskin” executive left and was given the full-time role after a short search by the bank. When he took over in April 2020, the bank’s shares had plunged (along with the rest of the market in the great pandemic sell-off in March and early April). The shares were around $15.15 at the time, but they quickly rebounded to $26.80 by mid-June of that year.
Since then, the shares have gradually edged higher as the bank’s performance improved with deep cost cuts, the sale of non-essential businesses and investments, and marked improvements in lending practices—especially in home loans.
Westpac shares closed at $32.10 on Friday, more than doubling from when King took over (although this is somewhat misleading). The gain over the past year is a better measure of his success. The shares were around $21.17 a year ago this week, so it’s been a solid rise of around 50%.
They ended at $31.46 yesterday, with most of King’s gains still intact in the price.