Westpac CEO Peter King has admitted to the bank’s shortcomings in risk handling and promised to revamp its culture.
After a critical internal review, the bank admitted that it has failed to fix an “immature and reactive” culture of dealing with risks.
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The banking giant has been a part of a series of scandals including last year’s anti-money laundering as well as a child exploitation scandal.
The Australian Prudential Regulation Authority (APRA) has forced the lender to “reassess” its risk culture, governance and accountability.
In a statement, Westpac said: “The main conclusion from the reassessment is that important aspects of Westpac’s non-financial risk culture are immature and reactive.
“The reassessment confirmed that Westpac was overly complex which results in confusion around accountability and challenges in execution.”
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By GlobalDataAccording to the internal review, the bank’s efforts to improve risk management have been too incremental since 2018.
As a result, King, along with Westpac chairman John McFarlane admitted that the bank lacked the required momentum for change.
King and McFarlane jointly said: “The reassessment makes it clear that what is required is a programme of deeper change.”
King added: “Westpac would launch a priority program called Customer Outcomes and Risk Excellence (CORE) that would aim to set clear risk boundaries for decision making and provide extra training for staff.
“It is clear we have more to do to address these shortcomings, including improving our risk management capability and risk culture which is not where we want it to be.”
The review also found that leaders blamed each other after an incident had occurred. Hence, the programme will also focus on strengthening the “psychological safety”.
