November 27, 2019 / 12:06 AM / 12 days ago

Australia's Westpac cut from home-loan scheme as scandal fallout spreads - The Australian

SYDNEY, Nov 27 (Reuters) - Australia’s Westpac Banking Corp lost a bid to supply loans to a government home-deposit assistance scheme in a blow to its main income generator as it battles a money-laundering scandal, The Australian newspaper reported on Wednesday.

Australia’s four biggest banks - which are in a bare-knuckle fight for mortgage business amid declining profitability and rising costs - applied for two positions on a panel of lenders for the nationwide home-affordability scheme from Jan. 1, 2020, but Westpac now expected to be excluded, the newspaper reported citing unnamed Westpac sources.

The snub highlights the reputational risk now attached to Westpac after Australia’s financial crime watchdog last week sued the lender for allegedly enabling 23 million transactions that breached anti-money laundering and terrorism financing laws, including offshore payments between known child exploiters.

The bank’s CEO stepped down on Tuesday under pressure from senior politicians and major investors, and its chairman said he would retire in early 2020, sooner than planned. The bank, Australia’s oldest and second-largest, also faces billions of dollars in fines.

National Australia Bank, the country’s third-largest lender, received confirmation it would be involved in the scheme, leaving the No. 1 lender Commonwealth Bank of Australia and No. 4 lender Australia and New Zealand Banking Group Ltd in competition over the remaining spot, the newspaper report said.

Australia’s major retail banks make most of their profit from the home loans.

A Westpac spokesman did not respond to a Reuters call and email seeking comment, while a spokeswoman for the agency administering the scheme, the National Housing Finance and Investment Corporation (NHFIC), declined to comment. NAB was also not immediately available for comment.

The two major banks appoint­ed to the panel of lenders for the first-home deposit scheme would be eligible to receive up to half the scheme’s 10,000 guarantees alloc­ated each financial year, The Australian reported.

Westpac shares were down 1% in early trading on Wednesday, taking its total decline to 7.2% or A$6.8 billion ($4.6 billion) in market capitalisatoin since the close before the money-laundering lawsuit was announced.

$1 = 1.4736 Australian dollars Reporting by Byron Kaye; Editing by Stephen Coates

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