Westpac (ASX: WBC) has been talking with ASIC about what to do about its capital raising.

Westpac Banking Corp (ASX: WBC) is one of Australia’s ‘Big Four’ banks and a financial-services provider headquartered in Sydney. It is one of Australia’s largest lenders to homeowners, investors, individuals (via credit cards and personal loans) and business.

Westpac’s Solution

The AUSTRAC troubles have come just as it was doing a capital raising to raise a few billion dollars to improve its balance sheet and make sure it meets the “unquestionably strong” benchmark.

After talking with Australian Securities and Investments Commission (ASIC) Westpac has decided to provide a withdrawal option for share purchase plan (SPP) applicants who applied for shares prior to the AUSTRAC announcement on 20 November 2019 announcement. The bank provided details in the announcement for how to do it.

In terms of the ongoing capital raising, Westpac reminded investors that the capital raising price will be the lower of $25.32 or a 2% discount to the average share price of the five days up to the SPP closing date of 2 December 2019 – this period started on 26 November 2019.

Westpac is facing flack from institutional fund managers who took part in the capital raising at a higher price but wasn’t aware yet of the AUSTRAC issues.

According to Australian Financial Review reporting, Wilson Asset Management said yesterday that the costs for Westpac will keep mounting from this scandal.

A new CEO at Westpac will do a major clean-out at the bank which would come at a time when there’s already weak credit growth, lower net interest margins (NIMs) and very low central bank interest rates.

Wilson Asset Management lead portfolio manager Matthew Haupt from WAM Leaders Ltd (ASX: WLE) said: “The new chief executive will kitchen sink it. There will be more to come out.” 

WAM Chairman Geoff Wilson said the Westpac’s CEO and board’s attempt to ride it out was out of touch with community expectations. He said: “That’s what they totally missed. Definitely I think you should vote against everything” referring to the upcoming Westpac annual general meeting (AGM).

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