Australia's Westpac Banking Corp <WBC.AX> on Thursday named a former Barclays <BARC.L> boss as chairman, entrusting veteran banker John McFarlane to help steer it through the fallout of a massive money-laundering scandal.
McFarlane's appointment is designed to draw a line under a period of instability at Australia's No. 2 bank. Its two top executives stepped down two months ago, after the corporate regulator charged Westpac with breaches of anti-money laundering laws it said facilitated child exploitation.
Westpac's woes are part of wider ructions in the banking industry. Three of the four banks that dominate the Australian market have lost their leaders in the wake of damaging revelations from a government-backed inquiry into misconduct in the industry.
Investors and analysts welcomed the news, given McFarlane's extensive credentials and the urgent need for stability at the scandal-hit bank, which is still looking for a new chief executive.
"He has significant Australian banking experience, significant British banking experience, and the Australian market knows him well, so I think it will be received positively," senior Credit Suisse banking analyst Jarrod Martin said.
McFarlane, 72, was CEO of Westpac's rival Australia and New Zealand Banking Group <ANZ.AX> for a decade during the early 2000s and was chairman of British bank Barclays <BARC.L> until May last year.
His career also included 18 years as an executive at Citigroup Inc. <C.N> and four years at Standard Chartered <STD.BT>.
One of McFarlane's first tasks on assuming the chairman role on April 2 will be to oversee the search for a new chief executive, with analysts already predicting his preference would be for an external candidate.
"My focus initially will naturally be on resolving the company's current issues but equally important, to position it as quickly as possible for long-term success," McFarlane said in a statement.
He warned however, that the appointment of a "world-class" CEO could "take time".
McFarlane will also soon have to consider whether to further cut the bank's dividends amidst higher regulatory capital requirements and a potentially huge fine due to money laundering law breaches.
"He will shake up the executive ranks, and he won't hurry in appointing a CEO, he will back his own ability to be an executive chairman," Matthew Wilson, banking analyst at Evans and Partners said.
Westpac shares were 0.32% lower on Thursday morning, in line with the broader market <.AXJO> which was down 0.36%.
Westpac's money laundering scandal came to light in November when regulator AUSTRAC launched legal action against the bank, accusing it of enabling 23 million payments in breach of anti-money laundering laws, including the facilitation of offshore payments relating to child exploitation.
It led to the resignation of Chief Executive Brian Hartzer and forced current Chairman Lindsay Maxsted to bring forward his retirement.
At last month's annual meeting, the lender's shareholders voted down executive pay for a second year due to investor outrage over the scandal.
Last week, mining giant BHP Group <BHP.AX> said Maxsted will not stand for re-election as a director on its board.
(Reporting by Paulina Duran and Nikhil Kurian Nainan; Editing by Arun Koyyur, Tom Brown and Jane Wardell)
