WESTPAC has listed automotive finance as one business unit to be sold off as it cleans the decks of businesses that it deems unable to offer suitable returns.

Auto finance has been grouped by Westpac within its wealth sector, including those operating products in superannuation, retirement, investments and general and life insurance.

In its half-year report, Westpac Group’s CEO Peter King said these were listed as businesses that “don’t have sufficient scale or where the returns are insufficient for the risk”.

The move comes after Westpac, along with its rival Australian banks, were shaken by the Hayne Royal Commission into the banking sector in 2018 then, late last year, the AUSTRAC provision for civil penalties – of which Westpac has provisioned $900 million – relating to contraventions of its obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act. The latest shudder has been the effects of the pandemic.

Westpac owns 75 per cent of St George Motor Finance Ltd. In the latest half-year report, Wesptac stated personal lending in credit cards, personal loans and auto finance, was down 12 per cent or $2.6 billion in the first half of the 2020 financial year compared with the same period in the 2019 year.

The plan is to move the wealth assets into a new structure and then consider selling it.

“The changes are a significant step to reducing the complexity of our portfolio and will allow the group executives to focus on improving performance in our Australian and New Zealand banking businesses,” Mr King said in the report.

“This is the most difficult result Westpac has seen in many years. It is significantly impacted by higher impairment charges due to COVID-19, as well as notable items including the AUSTRAC provision.”

The new structure, now called Specialist Businesses division, will be run by chief executive Jason Yetton who comes from the Commonwealth Bank where he was chief executive officer of NewCo, a similar scenario to his new role. NewCo is CBA’s planned business unit that collated its wealth management and mortgage broking arms.

NewCo was also intended to be sold off by CBA but that sale is pending while the Commonwealth Bank focuses on ongoing issues after the fallout of the Hayne Royal Commission.

Meanwhile, Westpac said in its half-year report that customer deposits were up $19 billion over the half, more than funding loan growth which increased by $5 billion. The deposit to loan ratio is now over 75 per cent.

“We are well capitalised and our liquidity and funding metrics are comfortably above regulatory requirements,” Mr King said.

By Neil Dowling