WBC - Westpac Banking Corporation

[PZ99]

ANZ / WBC / NAB would all have to be sub 23's before I'd reinvest. That's where they were prior to the election. BOQ might be tempting at low 8's

 

[sptrawler]

ANZ / WBC / NAB would all have to be sub 23's before I'd reinvest. That's where they were prior to the election. BOQ might be tempting at low 8's

It will be interesting to see if they get there, I doubt it, but if they do I will be buying more. OMG as if I am not heavily enough into Banks.

 

[Sharkman]

"The anti-money laundering regulator is accusing Westpac of failing to report more than 19.5 million international funds transfer instructions to it over a period of five years, for money moving into and out of Australia."
We will not be participating in their capital raising now, but prior to this thought WBC may be fairly priced.

tend to agree, i had thought that at a theoretical ex-rights ex-div price of around $27, the rights issue at $25.32 was reasonable value on the premise that following the royal commission, all the skeletons were now out of the closet, and the banks could proceed with making the necessary remediations and getting things back to normal. i was looking to participate too, as that would have been a significant discount to the then theoretical ex-rights ex-div price, but this latest scandal has thrown cold water over all of that.

then i thought about doing it anyway, under the assumption that the implied vols would be elevated because of this incident, and i could just sell ATM/slightly ITM covered calls over the rights issue units to offset some of the risk. but i just checked the options market and was surprised to find that the WBC IVs are not all that high - about 16.5 for the Dec ATMs, 15 for Jan. spreads also seem par for the course - 0.47/0.54 for the Dec 25 calls. wonder why that is.

 

[kahuna1]

Added at the open.

Its a 91 billion dollar company which MAY ... get fined 1 billion.
May, being the operative word. As this case is vastly different than the CBA one and their auto tellers, the MAY is an even bigger MAYBE.

Whilst maybe, maybe the dividend at 160 gets cut to 150 ... at some stage somewhere ... with rates likely to get cut to 0.5% and RBA saying they stay low for some time, years, being given a fully franked say 150 dividend at say 6% ... with Franking is $25- ... and that's IF ... Westpac has to pay the fine and experience of the past and the drubbing the ASIC copped trying to fine Westpac should be some indication as to what occurs.

Who knows, but below $25- its getting nice, and that's even allowing for a massive cut in dividend to $1.50 or around 3.5 billion ... over time taken as a hit. By this I mean the fine apportioned over say 5 or more years. So right here at $25- its a 6% yield EVEN using a slashed dividend ... and 8.04% grossed up with dividend imputed.

Time only will tell and I note the market is having a cow. maybe it goes to $22- and a $1.50 slashed dividend its a yield of 6.818% Grossed up to via dividend an astounding 9.13% when its likely we remain below 1% interest rates for 2-3 years.

Somewhere between the two seems good to me !!

Famous last words as the market yet again hits new lows. We have Banks near 10 year lows and others at 10 year highs. I am more concerned about hot air stocks like COL and WES which to me seem 15-20% too high.

Enjoy.

 

[sptrawler]

Added at the open.

Its a 91 billion dollar company which MAY ... get fined 1 billion.
May, being the operative word. As this case is vastly different than the CBA one and their auto tellers, the MAY is an even bigger MAYBE.

Whilst maybe, maybe the dividend at 160 gets cut to 150 ... at some stage somewhere ... with rates likely to get cut to 0.5% and RBA saying they stay low for some time, years, being given a fully franked say 150 dividend at say 6% ... with Franking is $25- ... and that's IF ... Westpac has to pay the fine and experience of the past and the drubbing the ASIC copped trying to fine Westpac should be some indication as to what occurs.

Who knows, but below $25- its getting nice, and that's even allowing for a massive cut in dividend to $1.50 or around 3.5 billion ... over time taken as a hit. By this I mean the fine apportioned over say 5 or more years. So right here at $25- its a 6% yield EVEN using a slashed dividend ... and 8.04% grossed up with dividend imputed.

Time only will tell and I note the market is having a cow. maybe it goes to $22- and a $1.50 slashed dividend its a yield of 6.818% Grossed up to via dividend an astounding 9.13% when its likely we remain below 1% interest rates for 2-3 years.

Somewhere between the two seems good to me !!

Famous last words as the market yet again hits new lows. We have Banks near 10 year lows and others at 10 year highs. I am more concerned about hot air stocks like COL and WES which to me seem 15-20% too high.

Enjoy.

Nailed it, IMO

 

[rederob]

"Westpac shares fell another 1.9% yesterday to close at $25.16 taking the losses for the past two days to more than 5% and over 12% in the past month.

The shares touched a 10 month low of $24.80 during trading. That meant the shares fell under the $25.32 issue price in the recent $2 billion capital raising.

Westpac’s $500 million retail funding raising is now underway and closes on December 1. A price-earnings ratio of more than 7% (at the issue price of $25.32) will prove to be very attractive to retail investors.

It will prove to be a litmus test to see if small investors want to punish Westpac in any way."

 

[Country Lad]

"Westpac shares fell another 1.9% yesterday to close at $25.16 taking the losses for the past two days to more than 5% and over 12% in the past month.

The banks and particularly WBC have a history of fluctuations. This time the financial environment is quite a bit different than in the past, so it will be interesting to see whether the market decides now is not the time to be patient with it.
Unfortunately, the data provider for this monthly chart in the past has adjusted for issues, share buy backs, dividend re-investment etc, so it doesn't reflect the all time low of 94 cents in Dec 1990.

 

[jbocker]

It will prove to be a litmus test to see if small investors want to punish Westpac in any way."

I would hope more than just the small investor. It raises a few questions on punishment, Supposing the $1Billion fine is enforced to whom do they pay.

Outside of the board or a shareholders meeting can 'another party' remove the CEO or other board members.​

 

[rederob]

Outside of the board or a shareholders meeting can 'another party' remove the CEO or other board members.

Yes, if he/she/they are jailed for criminal activity... which some CEOs probably sail very close to wrt to their cavalier attitude towards customers and their motivation for bonuses at any cost.

 

[sptrawler]

It will be really interesting to see the final result, of all this banking turmoil, I think a credit crunch is well and truly on its way.

 

[Toyota Lexcen]

The reality is the Aus bank sector is on its knees.

They were hit with the banking tax. From 2015 its been a downward trend. Can only see it muddling along.

Shareholders of the Australian banks are paying (increased capital ratio) to keep the country from going under in situations of financial shock. NZ about to change their capital requirements as well so again bank shareholders have to keep the country afloat in times of financial shock.

Scomo made some interesting points they other day. Clearly believes they aren’t lending, yet ASIC thinks demand is weak.


10yr low for WBC

 

[So_Cynical]

No one has even mentioned the slew of new banking participants, these new guys are mostly online
only and highly automated, app driven, and will be taking market share off the established players.

 

[Smurf1976]

It will be really interesting to see the final result, of all this banking turmoil, I think a credit crunch is well and truly on its way.

I won't derail the thread too much but suffice to say that yesterday I had cause to do something I very rarely do - go into a bank branch.

Long story thought I walked out empty handed. Thought it was going to be a simple process but staff looked somewhat despondent whilst saying "because of the royal commission.......".

I'll be calling to discuss how to resolve the issue on Monday. If not resolved then next step = legal advice. I'll leave it at that for the personal stuff but banking is pretty much stuffed it would seem when we're at the point of inability to perform basic functions. Add in the lack of interest payments and cash has never looked better.

Back to Westpac specifically, I think really there's a luck of the draw aspect to all of this. Chuck the names of all the big banks in a hat and draw one out. Regardless of who's in the headlines, ultimately they're all broadly similar it seems.

 

[Value Hunter]

I agree with So Cynical. I have long thought banks are dinosaur companies especially the ones in Australia.

If they keep going the way they are going they will be lucky to exist in 20 years time. Banks are so inefficient, technologically backwards, slow and badly managed that I dread dealing with them. Within nthe next 10 - 15 years Millennial will be the biggest spending demographic and you can bety your bottom dollar that a rapidly rising share of their wallet share will go to competitors of the big 4 banks. It will be death by 1000 cuts as companies like Afterpay, Wizr, Raiz Invest, Stockspot, etc eat into the peripheries of the big banks business while niche neo banks with lower cost structures and no legacy systems pop up to take them head on in their core mortgage business. That is not even mentioning the threat that big boys like Amazon, Facebook etc don't eventually somehow get into the home loan game.

 

[kahuna1]

It will be death by 1000 cuts as companies like Afterpay, Wizr, Raiz Invest, Stockspot, etc eat into the peripheries of the big banks business while niche neo banks with lower cost structures and no legacy systems pop up to take them head on in their core mortgage business.

How quaint ... Afterpay charging 35% interest rate is going to end banks ?
Banks and money lenders have been around for 4,000 years.

Its all going to end next week ?

Must run and shave both eyebrows off.
Banks, whether ones loves them or hates them, provide a service. This service will still need to be still provided.

Banks have the infrastructure, the technology and experience and have served for many years. Often yes they get out of hand, we however are at the other extreme where bank bashing is a sport in this nation.

For me, expect Westpac to be whilst not something I love, as we head lower, to be of some value.

Cant say that about the latest list of new whizz bang things listed as the next betamax video.

Uber is on its knee's even Amazon is struggling as traditional operators adjust to new realities and take it back. Expecting banks not to do so, is strange. My pay and wave card is great and it needs no tin pot undercapitilized crappy tech thing to take over the role of a safe place for assets and reliable payments is a common delusion of these times.

Good luck. Please turn out the lights when any of our big 4 disappear. They will adjust if needed and they are well aware of competing technologies which, well, appeal to some .... but rarely work longer term.

Still buying if we go lower

 

[sptrawler]

The big thing is, the Government of both persuasions, like having the big four.
There has been a hiccup with the Royal commission, but the Government will want it to get back to business as usual asap.
It is much easier for the Government to regulate and control the money system with the big four, than the little four thousand.
Just my opinion, but I think this is the samarco dam burst, for the big four.

 

[bigdog]

Two ASX announcements today and uploaded below

don't hold

101

 

[jbocker]

From the announcements they will withhold part or all of their 2019 Short Term Variable Reward and the costs for rectifying the issues to be $80M in 2020.

I think you have blown much more than your STVR. Maybe the board fees should be bundled into that. And then start sweating your long term rewards.
If Prince Andrew has to be removed from duties, and I cannot see how Philippines fiasco wont imply similar reaction.
I am uncertain but are they saying each LitePay transaction cost a $5 fee. Is that for all 19million transactions that Westpac failed to report on? Well, good to see they have the funds to cover investing of something like $54M in Protecting people program over the next 3 to 6 years.

 

[kahuna1]

Ho hum ...

lets bash the banks.
Seriously whilst sickos and their payments ... yep awful ... is it the responsibility of the bank to monitor every and all transfers ? Their response I note is to STOP it totally ... its not worth their time.

Since I was aware of this issue 3 months ago and they reported it to AUSTRAC and it was contained in their reports from August .... its a bit rich that the 12 they reported already to AUSTRAC now 3 months latter AUSTRAC comes back and claims they are a problem with out giving any indication to the bank in them meantime as to WHAT to do or to stop payments ect.

Good luck with a fine idiots !!

Westpac reported it ... to AUSTRAC and got no response ... NONE other than a claim 3 months latter a statement of claim in legal case.

IDIOT bureaucracy at work from the idiot treasurer we now have !!

On this alone Westpac can and likely will doom to fail any case involving too big a fine. Yes they likely will agree to a massive one ... but ... if they fought it legally the statement of claim in already invalidated totally via AUSTRAC actions or should I say lack of action and guidance.

 

[sptrawler]

Imagine AUSTRAC trying to police 4000 banks, instead of 4, just underlines what we have been saying IMO.
I just hope WBC are still cheap when I get home.