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March 19, 2019

Westpac overhauls wealth management business

Australian lender Westpac has agreed to divest its financial advice business, which offers advice through its salaried planners, to Viridian Advisory as part of a restructure of its wealth management operations.

The deal, whose financial terms were not revealed, is expected to close on 30 June 2019.

As part of the deal, nearly 175 BT Financial Advice salaried advisers and other support staff will move to Viridian.

Existing clients of the business would be provided an option to transfer.

BT Group Licensees operating under the Securitor and Magnitude brands will be offered the provision of going independent or moving to another licensee, including Viridian.

The group COO Gary Thursby will be in charge of BT remediation programmes.

Meanwhile, the remaining wealth management operations will be consolidated with Westpac’s consumer and business units.

Under the restructure, private wealth, platforms and investments, and superannuation businesses will merge with the business unit.

The insurance operations will be merged into the consumer unit.

With the facelift, BT Financial chief Brad Cooper will depart.

Also quitting is consumer bank CEO George Frazis, who will be succeeded by existing business bank head David Lindberg.

The general manager of commercial banking Alastair Welsh will replace Lindberg as business bank CEO on an interim basis till a permanent replacement is found.

The bank expects one-off costs of up to A$300m ($213.1m) from the divestiture.

However, it expects the restructure to reap productivity gains of around A$20m.

Westpac group CEO Brian Hartzer said: “These changes allow us to focus investment in areas where we have a competitive advantage such as platforms and insurance.”

Westpac is the last of the nation’s Big Four banks to exit financial advisory businesses.

The banks were recently under the scanner of the royal commission for their financial advice activities.

New rules including ban on grandfathered commissions followed as a result.

Last year, Commonwealth Bank of Australia (CBA) announced plans to demerge its wealth management and mortgage broking businesses.

Earlier this week, the bank put an indefinite hold on the plan citing focus on the royal commission recommendations and customer compensation issues.

Similarly, NAB too announced a demerger of its wealth business.

It delayed the process as well to focus on the recommendations of the royal commission.

ANZ agreed to offload its wealth business to IOOF.

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