Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
We all know Westpac as one of the “big four” banks that run Australia’s personal banking industry. Many of you may use the Westpac service yourself, yet what you may not know is that Westpac has been accused of turning a blind eye to over 23 million accounts of money laundering, sex trafficking and terrorism financing. Making these “allegations” even more confronting is that both the CEO Brian Hartzer and Chairmen of the board of over 10 years have decided to step down from their roles. In a society that has become more aware of the decisions of financial institutions, there is no doubt in my mind Westpac is going to suffer, terribly to the loss of confidence of their own customers and stakeholders as seen in the AMP fee for no service case.
The tip of a very dangerous Iceberg
The news of Westpac’s breaches are said to be the very first layer of ice on a colossal iceberg of corruption we call banking. The most puzzling element of this is that the banking industry still expects consumers to trust them, even after what we have seen with AMP board members referring to clients as animals in a “holding pen”. The best broking advice one could give, would be to stay very far away from bank shares, especially unethical corporations until the storm of inquiries passes. A short against Westpac stock performance would be a smart move as Westpac shares will not bounce back to $30 + for a significant amount of time. On a positive note,it seems Banks have become a vehicle for change in society, as we can learn from them what NOT to do when dealing with clients or dealing with unauthorised and shady transactions.
Too big to fail
I think the one thing in banking that effects every day, hard working people the most, is that no matter what Westpac does they really are “too big to fail”. With revenues in the billions, remission payments would be nothing more than a speeding ticket. Even if clients left Westpac and they begun to enter a solvency phase, the Australian Government would pick them up again.They really are “too big to fail”. No matter how unjust myself or you may think there actions are, at the end of the day they will always win.
Ethical investments will always win
Unethical investments become attractive to speculative investors as they tend to generate fast growth, however as a long term investor this will only cause you misery. Investing in a big bank like Westpac holds significant risk, risk of which you cannot control and when the time comes and the CEO and board members disapear, it is the shareholder that is hurt the most. Understanding the operations of a bank and its culture before investing is a crucial element in mitigating the risks you could potentially pay for. If there is one thing you should take away, it is that ethical investing will always come out on top in my opinion.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Tyger Fitzpatrick , Founder of Youth Investment Group .