FILE PHOTO: A pedestrian looks at his phone as he walks past a logo for Australia’s Westpac Banking Corp located outside a branch in central Sydney, Australia, November 5, 2018. REUTERS/David Gray/File Photo
(Reuters) – Goldman Sachs (GS.N) cut its target price for Westpac Banking Corp (WBC.AX) on Friday as Australia’s second-biggest bank stands accused of massive breaches of anti-money laundering laws and faces billions of dollars in fines.
Goldman lowered its 12-month share price target by 10% to A$25.58, citing the allegations and associated risks including fines, class actions, loss of customers and capital concerns.
The U.S. investment bank, in a research report, drew parallels to a similar case against Commonwealth Bank of Australia (CBA.AX) which resulted in a A$700 million ($475 million) penalty.
It maintained a “neutral” rating on the stock, which is down more than 5% from its Nov. 19 close before the allegations were made public, against a 2.1% fall for the broader market .
Australia’s financial crime regulator this week accused Westpac of 23 million breaches of anti-money laundering laws, triggering calls for the resignation of Chief Executive Officer Brian Hartzer.
Hartzer said on Wednesday he accepted most of the regulator’s assertions but “at a senior executive level, for the board, for me personally, in no way have we been indifferent on this”.
Westpac had self-reported the breaches to the regulator and had since shut down the service at the center of the complaint which let customers and affiliate overseas banks process payments from Australia, he said.
Australia’s big banks have been scrambling to rebuild community trust since a public inquiry in February found widespread misconduct in the financial sector.
Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Jonathan Oatis and Stephen Coates