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$2.7 Million Payout For Westpac CEO As He Resigns Amid Scandal

Westpac CEO Brian Hartzer is the first scalp to be claimed by the bank's regulatory scandal, as it vows to "urgently fix" issues raised amid the scandal of 23 million alleged breaches.

The Big Four bank announced its CEO "will be stepping down" as of next Monday, with the bank's current Chief Financial Officer Peter King to take over as acting CEO. In a statement announcing the changes to the Australian Stock Exchange on Tuesday, Westpac Group chairman Lindsay Maxsted said the changes were "in the best interest of the Bank."

"The board accepts the gravity of the issues raised by AUSTRAC," Maxsted said

"We are determined to urgently fix these issues and lift our standards to ensure our anti-money laundering and other financial crime prevention processes are industry leading."

The bank on Tuesday said Hartzer would step down on December 2, but will still be paid his fixed remuneration of $2.686 million over the next year.

Westpac CEO Brian Hartzer will step down. Image: AAP

Maxsted also announced he would "bring forward his retirement as Chairman to the first half of 2020", as well as confirming another director, Ewen Crouch, would not seek re-election at the bank's coming annual general meeting.

Westpac has been under immense pressure to take decisive action, after Australia's financial intelligence agency accused the lender of breaching anti-money laundering and counter-terrorism financing laws more than 23 million times.

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Westpac Shares Plummet After Watchdog Accuses Bank Of More Than 23 Million Breaches

Westpac shares have hit a six-month low after Australia's financial intelligence agency accused the lender of breaching anti-money laundering and counter-terrorism financing laws more than 23 million times.

The AUSTRAC court action -- which also involves allegations Westpac failed to properly investigate transactions to the Philippines and other parts of Southeast Asia related to potential exploitation of children -- could lead to a huge fine for the firm.

Rival Commonwealth Bank last year settled a similar case related to 53,000 breaches for an Australian corporate record $700 million.

In recent days, Westpac had announced plans to cut or reduce executive bonuses in the wake of the scandal, but had resisted calls for big-name heads to roll.

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Westpac Cuts Executive Bonuses After 23 Million Breaches Of Law

Treasurer Josh Frydenberg has repeatedly declined to say whether the board of Westpac should be sacked following money-laundering accusations.

Federal treasurer Josh Frydenberg was asked by ABC's Insiders program on Sunday. whether he would be happy if the CEO and chair of Westpac are still in place in six months time.

"History shows you that these issues build a momentum of their own and where boards start is not necessarily where boards finish," he answered.

Home Affairs minister Peter Dutton had taken a stronger line, claiming Westpac executives had "through their negligence, have given a free pass to pedophiles".

Peter Dutton
Peter Dutton was among those who slammed Westpac. Image: AAP

“We will make sure through Austrac and the other entities within the Home Affairs portfolio that people who commit those egregious offences or breaches of the law will pay a serious price," Dutton said.

Labor's shadow assistant treasurer, Dr Andrew Leigh, said "I welcome the decision" for Hartzer to step down.

"I think it was the right decision for Brian Hartzer to make, but it doesn't end the matter. Westpac is still accountable for these 23 million breaches. It's just extraordinary," he told ABC Radio.

"I think Australians will be looking for Westpac to be fully accountable and to explain how it's changed its systems to make sure this doesn't happen in the future."

In The Australian newspaper on Tuesday, just hours before Westpac announced Hartzer's departure, it was reported that the bank had cancelled Christmas parties -- but that the CEO himself was still trying to downplay the ramifications for Westpac.

"For people in mainstream Australia going about their daily lives, this is not a major issue so we don’t need to overcook this," The Australian reported Hartzer as telling an executive meeting on Monday.

"This is not an Enron or Lehman Brothers, we will get through this."

With AAP.