The Westpac Banking Corp (ASX: WBC) share price is in the red this morning. This comes amid the release of an independent report highlighting "material shortcomings" in the Westpac New Zealand board's risk governance.
The report has led the Reserve Bank of New Zealand (RBNZ) to criticise the Westpac New Zealand board.
Westpac has accepted the report's findings. The bank stated it is already addressing the recommendations.
At the time of writing, the Westpac share price is $21.68, 0.55% lower than its previous close.
For context, the S&P/ASX 200 Index (ASX: XJO) is edging 0.01% higher, while the All Ordinaries Index (ASX: XAO) is sporting a 0.06% gain.
Let's take a look at today's news.
Westpac share price slumps amid RBNZ criticism
The Westpac share price is slipping amid the bank's admission its New Zealand board "fell short" in risk governance practices.
The report was commissioned by Westpac New Zealand under instruction from the RBNZ and created by consulting firm Oliver Wyman.
Its creation stemmed from the RBNZ's concerns over Westpac New Zealand's material compliance issues. The RBNZ stated the report has confirmed those concerns were warranted.
RBNZ deputy governor and general manager of financial stability Geoff Bascand commented on its findings:
The report's findings highlighted material risks to effective risk governance and noted that the role played by the board fell short of the standard expected of an organisation of the bank's scope and scale. In some cases, issues that had been acknowledged by the board for several years had not received due attention or effective remediation.
Bascand also said the report had identified "historic underinvestment in risk management capabilities" at Westpac New Zealand and noted investment appeared to be reactive, not strategic.
What did Westpac say?
In response, Westpac New Zealand chair Pip Greenwood, who took up the role last month, said following through on the report's recommendations was a priority:
We have always aimed for high standards of risk governance but acknowledge that in the instances identified we fell short…
We're united in our determination to keep lifting capability in this area and will continue to work constructively with the RBNZ on these matters and ensure they are up to speed with our progress and support our plans.
Since Westpac New Zealand commissioned the review, it has welcomed a new chair and 6 new directors.
A second independent report commissioned by Westpac New Zealand under order of the RBNZ will be published in the first half of 2022. It will assess the actions Westpac New Zealand has taken to improve its liquidity risks.
