Westpac Banking Corporation (ASX: WBC) has announced that it will cease offering private banking services to its customers under the St George and Bank of Melbourne brands, as part of its simplification strategy. The move will affect about 4,000 high-net-worth clients, who will be transferred to Westpac’s private wealth division or other banking options.
Westpac’s simplification strategy
Westpac, one of the big four banks in Australia, has been undergoing a major transformation since 2020, when it faced a record $1.3 billion fine for breaching anti-money laundering laws. The bank has been selling off non-core assets, such as its life insurance business and its operations in Fiji and Papua New Guinea, and streamlining its operations to focus on its core markets and products.
One of the key aspects of Westpac’s simplification strategy is to reduce the number of brands and platforms it operates, and to consolidate its customer segments. The bank currently operates four retail banking brands: Westpac, St George, Bank of Melbourne, and BankSA. The bank has also been offering private banking services to its affluent customers under each of these brands, as well as under its private wealth division.
However, the bank has decided to end the duplication of private banking services across its brands, and to focus on delivering a consistent and premium service to its high-net-worth clients under the Westpac brand. The bank said that this will enable it to invest more in its private wealth capabilities, and to provide better access to specialist advice and solutions for its customers.
Impact on customers and staff
The decision to end private banking services for St George and Bank of Melbourne customers will affect about 4,000 clients, who have a combined wealth of about $12 billion. These customers will be contacted by the bank in the coming months, and will be offered a choice of either transferring to Westpac’s private wealth division, or staying with their current brand but receiving a different level of service.
Westpac’s private wealth division caters to customers with more than $2.5 million in investable assets, and provides them with a dedicated relationship manager, access to financial planning, investment management, philanthropic services, and other exclusive benefits. Customers who choose to stay with their current brand will receive a standard banking service, with access to online banking, phone banking, branch network, and general advice.
The move will also have an impact on the staff who work in the private banking teams of St George and Bank of Melbourne. The bank said that it will try to redeploy as many staff as possible within the group, but some redundancies are inevitable. The bank did not disclose how many staff will be affected by the change.
Reaction from the market and analysts
The announcement of Westpac’s decision to end private banking services for St George and Bank of Melbourne customers was made on Monday, after the market closed. The bank’s share price closed at $20.74 on Monday, down 1.47% from the previous day.
Analysts have generally welcomed Westpac’s simplification strategy, as it is expected to improve the bank’s efficiency, profitability, and capital position. However, some analysts have also raised concerns about the potential loss of customers and revenue from the move.
According to Jefferies analyst Brian Johnson, Westpac could lose up to $120 million in annual revenue from ending private banking services for St George and Bank of Melbourne customers. He also said that some customers may switch to other banks or financial institutions that offer more tailored and personalised services.
On the other hand, Morgan Stanley analyst Richard Wiles said that Westpac’s decision is consistent with its strategy of focusing on its core markets and products. He also said that the move will help Westpac reduce its costs and complexity, and enhance its customer experience.
