An independent report into Westpac New Zealand’s risk governance has highlighted material shortcomings in the Australian-based bank’s oversight.
The Reserve Bank of New Zealand (RBNZ) instructed Westpac NZ to commission an independent report to address concerns, stemming from material compliance issues.
The central bank found fault with the lender’s risk governance processes and practices applied by the Westpac NZ Board and executive management.
The report, prepared by international management consulting firm Oliver Wyman, confirmed that these concerns were well founded.
“In short, the risk governance of Westpac NZ’s Board needs to see significant improvement,” Geoff Bascand, RBNZ deputy governor and general manager of financial stability, said.
Material Risks Highlighted
“The report’s findings highlighted material risks to effective risk governance and noted that the role played by the board fell short of the standard expected of an organisation of the bank’s scope and scale.”
Bascand said some issues that had been acknowledged by the board for several years had not received due attention or effective remediation.
“The report found there had been historic under-investment in risk management capabilities at the bank with investment appearing reactive, rather than strategic,” he added.
Westpac NZ said it accepted the findings of the independent risk governance review.
“We have always aimed for high standards of risk governance but acknowledge that in the instances identified we fell short,” board chairperson Pip Greenwood said.
Greenwood, who took over in October, agreed that strong risk governance and a strong risk culture are fundamental requirements for banks.
- George Russell