Westpac Banking Corp (ASX: WBC) shares have had a turbulent period over the past few weeks. Shares in the banking giant are currently fetching $31.30 apiece, up 36% this year to date.
But the stock peaked at $33.61 in the last week of September and has since sunk into the red, down nearly 5% in the past week.
Reports have surfaced that the bank found itself under scrutiny over the past year after being blacklisted by the Reserve Bank of Australia (RBA) for allegedly leaking content from private conversations between the pair.
Whilst not directly related to Westpac shares in any way, the incident puts Westpac in the spotlight as the third major financial institution to be reprimanded by the RBA for similar behaviour.
Let's take a closer look.
Westpac's RBA blacklisting?
In May 2023, Westpac's economists, traders, and clients were invited to a private, off-the-record meeting with the RBA.
This is routine stuff – the central bank regularly meets with industry to discuss monetary policy, economic conditions, and get feedback. These aren't public meetings, and Westpac shares also aren't impacted by this.
However, following this meeting, one of the attendees allegedly leaked private information, according to The Australian Financial Review. This led to Westpac being banned from hosting such private briefings for a year.
Westpac has now served its ban, but the incident highlights the delicate balance between transparency and market integrity. Westpac shares are non-phased by the update.
This is not the first time the RBA has enforced such a penalty. Investment banks RBC Capital Markets and Barrenjoey Capital Partners were also recently reprimanded for similar behaviour.
Whilst the RBA holds private discussions with private entities, it expects strict confidentiality from participants. These meetings are not meant to reveal sensitive information.
What next for Westpac shares?
Westpac shares have been strong this year, but analysts lack conviction about its future trajectory. According to CommSec, the consensus rating is a sell.
Just two brokers say to buy the stock, and the remainder, six and seven, say to hold and sell Westpac, respectively.
Goldman Sachs issued a sell rating on Westpac shares in August with a price target of $25.84.
The broker points to potential risks with Westpac's technology simplification plan and its heavy exposure to the housing market.
It says the downsides outweigh the positives of owning the stock.
Foolish takeaway
Westpac shares continue to face selling pressure in October, despite no major updates. The bank was banned from meeting with the RBA privately in the past year for breaching confidentiality.
It has served the ban now, but shares are down from September highs. Nevertheless, Westpac has gained 48% in the past year.
