Westpac fights global banking invasion

By Nick Stride

Friday 24th November 2000

The invasion of the Australasian markets by global providers has seen local banks rushing to provide "full service" to corporate customers.

David Willis, head of Westpac Institutional Bank, cites the acquisition by Merrill Lynch of McIntosh and Centaurus, Dutch bank ABN Amro's purchase of BZW, and the merger of Salomons and County Natwest with Citibank as examples of the assault on banking markets.

Coupled with a "huge power shift" from providers toward consumers, that is driving a fundamental change in the way banks deal with their customers, Mr Willis said during a visit to Auckland this week.

One of the ways Westpac has reacted is to split itself into groups focused on groups of customers with similar needs. Consumer and business clients have their own divisions while Mr Willis, a New Zealander now based in Sydney, heads the corporate division, which accounts for 25% of the bank's business worldwide.

With the increase in competition, he said, corporate customers could now insist banks understood their business and were prepared to offer commoditised products such as foreign exchange services through electronic portals that would allow them to compare competing providers, rather than having to ring around a succession of banks.

Global companies wanted to see a global spread of quotes. For those firms Westpac is the regional portal provider on the global yieldbroker.com.

At the next level, regional customers whose buying is restricted to Australia and New Zealand can access Ausmarkets, a portal set up in co-operation with the local banks.

At the small- to medium-size enterprise level Westpac details its equity, debt, cash management and treasury products on its own website.

Westpac's corporate division is sub-divided into units focusing on 13 industry groups with specialist staff - for example relationship managers and risk analysts.

An exporter, for instance, might be worried about the effect exchange rates, seasonal, or weather trends might have on their cash-flow profile. A banker who understood the business might be able to offset the effect on debt-repayment schedules by substituting some other receipt they might have.

As a result of a strategy adopted three years, WIB was the most successful part of the bank last year, recording an earnings rise of 25%, a return on equity of 23%, and coming top of the Greenwich survey of New Zealand corporate customers.

Mr Willis acknowledged the criticism heaped on Australian banks by politicians and the public but said boards were answerable to their shareholders first, as with any other business.

"But you can't fulfill your responsibility to your shareholders in any sustainable way without fulfilling your responsibility to the community."

"If you annoy the community in a big way you reduce shareholder value in a big way. We spend a hell of a lot of time, I can tell you, discussing that question."

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