Why the Westpac Banking Corp (ASX:WBC) share price sank lower today

The Westpac Banking Corp (ASX:WBC) share price has sunk notably lower today. Here's why…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the worst performers on the ASX 200 on Tuesday has been the Westpac Banking Corp (ASX: WBC) share price.

In morning trade the banking giant's shares are down almost 5.5% to $26.25.

Why are Westpac's shares sinking lower?

Although the market is a sea of red today and peers such as Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA) have dropped lower, the majority of Westpac's decline can be attributed to something else.

This morning the bank's shares went ex-dividend for its fully franked 94 cents per share final dividend. Eligible shareholders can now look forward to receiving this generous dividend in their nominated accounts on December 20.

Federal Court news.

In addition to this, news that that the Federal Court has refused to approve a $35 million penalty given to Westpac after it admitted to breaking responsible lending laws could be weighing on its shares.

According to the ABC, the settlement that was negotiated between Westpac and the Australian Securities and Investments Commission has been declined and the two parties will have to return to court on November 27 for directions.

This was not completely unexpected, though. Last month the AFR reported that former solicitor general Justin Gleeson, SC, told the Federal Court that the $35 million penalty agreed between the regulator and Westpac was not sufficient.

He suggested that the banking giant should pay at least $100 million if it breached lending laws.

What now?

While a penalty of $100 million isn't overly material for the banking giant, these penalties soon add up and are likely to have a knock on effect on investor sentiment.

And although I still see Westpac as a good investment option due to the low multiples its shares trade on, it certainly isn't a low risk on anymore.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why 29Metals, Brainchip, Platinum, and Premier Investments shares are falling today

These ASX shares are having a tough time on hump day.

Read more »

Man with his head in his head because of falling share price.
Share Fallers

Why 29Metals, Atlas Arteria, IDP Education, and Mineral Resources shares are falling

These ASX shares are having a tough time on Tuesday. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why ALS, EOS, NRW, and Patriot Battery Metals are dropping today

These ASX shares are starting the week in the red.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why AGL, Brickworks, IGO, and New Hope shares are dropping today

These ASX shares are having a poor session. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Amcor, Arafura, Brainchip, and South32 shares are tumbling today

These ASX shares are having a tough time on hump day. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Aussie Broadband, Liontown, Metals Acquisition, and Seek shares are falling

These ASX shares are having a poor session. But why?

Read more »