BULAW2611 Covid-19 Crisis on Westpac Bank Assignment Sample

• Subject Code : BULAW2611
• University : Federation University My Assignment Services is not sponsored or endorsed by this college or university.
• Subject Name : Law

Organisation Law

During the time of coronavirus pandemic, the banks have to help society in every way possible. It must be noted that during the time of the COVID-19 crisis, banks in Australia have taken under certain measures to support the business in the country as well as individuals by providing them loan guarantees and other rate subsidies. The banks are highly responsible for the extensive regulation and government stimulus for protecting the borrowers and maintaining the flow of credit in the country. It is the basic responsibility of the banks to manage their details and processes so that they can effectively forecast the potential losses.

During the time of COVID-19 crisis, Westpac Bank has faced serious negative impact upon its revenues, staffing levels as well as the balance sheet for the short as well as for the medium term. The essay will analyze various aspects as to how Westpac is dealing with the current COVID-19 crisis and what impact does the current situation have on the revenue, staffing level as well as the balance sheet of Westpac for a medium-term. The essay will also analyze various disclosure obligations that apply to Westpac. Apart from this various other matters that require an announcement to the ASX will also be discussed in the present essay.

The crisis of COVID-19 has a substantial impact on the economy as well as on the lives of the people. The strategies of government like social distancing and destruction in the supplied change are putting grievances and still upon the business especially the medium-sized enterprises that are on the front line are getting affected due to this[1]. However, Australia is quite far from something undergoing to the peak of economic crisis. Westpac had taken support from the government and regulators to introduce substantial protection for the consumers and small and medium enterprises. Westpac Bank in the territory of Australia had called the support of the flow of credit in the economy of Australia but it is important to know that these initiatives are perfecting the image.

Under the scheme of coronavirus, banks are ready to provide unsecured loans for small business enterprises for up to 250$ thousand Australian dollars and it must be noted that only 50% of this amount is guaranteed by the government of Australia. Apart from this, the government in Australia has also exempted various lenders for 6 months to speed up their small business after the time of the COVID-19 crisis[2]. It is important to know that up to 100,000 Australian dollars is the inward date upon the income tax for small and medium enterprises along with the employees.

So far as the wage subsidies are concerned, the Government of Australia had provided 1500 Australian dollars fortnight per employee for 6 months and had also provided a reduction in taxes which will instantly right of the threshold. This is a clear example of how the revenue and the balance sheet of banks in Australia during the time of the COVID-19 crisis are affected. Westpac is scrambling for implementing various relief schemes apart from their initiatives of repayment of certain forbearance. However, the fact cannot be denied that this is causing enormous pressure on the financial institution themselves as they are struggling to adapt to the surge of demand[3].

Every financial institution maintains a balance sheet where they record their data regarding all the creditors and the revenue they generate during the current situations to protect the borrowers from any liquidity, and it is important to note that the Westpac balance sheet is not balanced. It is important to note that there are three categories of borrowers[4]. Some continued to read according to their existing agreement without any relief, some believers do not pay with they would have otherwise paid because they are under a support scheme and the last category of borrowers are those people who have no forbearance agreement whatsoever with the financial institution.

it is important to note that the skill of intervention from the end of the Government and financial institutions like Westpac put enormous efforts to help the third category of borrowers. During the current situation when the economy of Australia is deteriorating due to the COVID-19 crisis, they often migrate from one category of borrowers into another as most of them rely upon the support mechanism provided by the government[5]. They often shift borrowers from different categories of considerable challenge for increasing future losses regarding the uncertainty of repayment from the borders to the financial institutions.

This is the major reason why the balance sheet of Westpac has also not stable because of the uncertainty of repayment due to the current deterioration of the economy. Due to the specific benefits provided by the government and the guarantee scheme loan provisions during the current situation, it has become very difficult to keep a relative account of fundamental cash flow data and financial ratios by the financial institutions. The economic turmoil flowing from the current COVID-19 crisis is creating a regarding the borrower and portfolio reaction.

To make reinvention in the internal system of the acting CEO of Westpac, King had become the CEO of Westpac. To maintain a balance for short as well as a medium-term period during the time of the pandemic, Westpac bank has set up a compliance committee that will focus upon setting and ensuring the adherence of future credit policy regarding mitigating between the operational risks. Apart from this Mac Farlane announce to bring changes in the system of the workplace for the employees in the financial institution to help them in coping up with the situation of coronavirus. It is important to note that the revenue of Westpac operating income has decreased by 3.0 %, cash profit has also decreased by 42.6% and the average return on equity has decreased by 5.6%[6].

These results are enough evidence to conclude that the impact of the COVID-19 crisis had severely affected the operations of financial institutions in the territory of Australia. It must be noted that the initial focus of the Government of Australia and The financial institutions like Westpac is working hard to keep up with their staff as well as their customers in the financial institution. To keep pace with the current position and situation of the country there is a requirement of an antecedent mobilization of various resources to provide service to be customers on a digital basis. This is the reason why Westpac had implemented various split teams and formulated remote working arrangements for dealing with any destruction of providing service to the customers. Managers' different lines of the financial institution had worked upon the coordination of the financial institution so that the uncertainty of job loss and income can be minimized.

Because of the increase of economic uncertainty across the global market, it is important to change the outlook of the financial institutions for preparing them to cope up with the stress of strengthening their balance sheets to recover from the losses. It is important to know that the major financial institutions like Westpac capital ratios of more than 7% and contain a liquidity coverage ratio for over a hundred percent of the minimum regulatory requirement. Due to the Reserve Bank of Australia's decision of reducing the cash rates to 5% the change has to be brought in the monetary policy for various Central banks[7].

In the short term, the major financial institutions like Westpac will focus upon the recovery of their customers and operating in the next stage of the economy after the COVID-19 crisis. In the medium term, Westpac will use the opportunity from the current crisis in a form of catalyst so that it can accelerate the digital transformation operational efforts. After the increase in the pandemic, Westpac had split the arrangements of their team in such a way that the critical themes are working for the multiple locations across the country irrespective of the odd times of the day so that the impact can be minimized upon the essential services categorized by the government. Westpac had taken initiative to enhance the capacity of various employees of the financial institutions so that they can easily work remotely. It is also important to know that Westpac had read deployed the staff to provide services to the inbound customer inquiries. 

Despite the pandemic, respect is trying hard to maintain and strengthen the balance sheet. So, therefore, it can be said that respect is helping the employees and had created over 22000 Australian side based employees in the financial institution so that they can work from home which is around 85% of their total employees. Westpac had also conducted more than 300000 hours of video as well as audio conferencing in March 2020. Apart from this Westpac is also enabling various borrowers of different mortgage repayment for 3 months and also providing the ability of deferred credit cards with no interest accrual upon it. Westpac is also providing 2.29 % of fixed loan rates for specific customers for the period ranging from 1 to 3 years.

Apart from this total amount of more than 10 billion dollars of mortgage is also provided by the bank to assess the customers for purchasing a home and also providing 2.0 % of the interest rate for the customers who are aged 65 years or more[8]. This evidence is enough to conclude that the current prices of COVID-19 had created an impact upon the revenue, working of staff as well as the balance sheet of the Major financial institution i.e. Westpac Indian territory of Australia. But it is important to know that Westpac is trying hard to keep pace with the current situation and responding positively with the economic crisis associated with COVID-19.

It is important to know that under the market disclosure policy of Westpac certain things need to be disclosed according to the policy of ASX. According to the case of Morley v ASIC[9] the disclosure is limited to the information that a prudent and reasonable person would likely expect having a material effect upon the value or price of any security issue by the entity. Westpac is obligated to disclose information related to the financial condition, material change in the projected performance of the financial year of the entity, any material change in the performance operations of the entity.

Apart from this respect must disclose any changes related to the senior executives and board of directors of the entity. Any recommendation or any related declaration associated with any distribution or dividend which will not be paid must be disclosed with the ASX. Apart from this if there is any material change regarding the securities that are listed with the entity must be disclosed. Also if there are any changes in the market speculation or under the accounting policies, the changes must be disclosed[10]. It is important to know that under any change in auditors or analyst, the boards of directors of Westpac are obligatory to disclose all the relevant information to the ASX.

It is important to know that according to do continuous disclosure 3.1, any entity which becomes aware of any information which is likely to believe that any reasonable person can likely to expected to have a material effect upon the price for upon the value of the securities of the entity, then under such circumstances the entity is required to tell about such information to the ASX[11]. According to section 677 of the corporation's act 2001, the material effect upon the value of price has been discussed. For section 674 and 675, any reasonable person would be deemed as expected the information of having a material effect upon the value of securities if any influence is made on the person who has invested in the securities[12].

Information will include any necessary information to prevent the false market as listed under rule 3.1 b. it is important to know that any confidential agreement will not prevent the disclosure of complying with the obligations listed under the rules and it is a mandatory requirement to give information ASX. There are certain types of information that needs to be disclosed by the entity, that can be any transaction which is likely to lead to the significant change like the activities of the entity, any discovery related to hydrocarbon or mineral, any activity related to the material acquisition, any termination of the material agreement or under any situation where any member becomes the painter for dependent in any lawsuit.

These are few grounds upon which the disclosure must be made to the ASX. However, it is important to note that there are certain exceptions to rule 3.1 under which the listing will not be applied[13]. If there is any situation of breach of law to disclose the information, if the information concerning is associated with any incomplete negotiation, any other information which is insufficient for warrant disclosure, any other information which is related or specifically generated for the internal management process of the entity and any information which is related to the trade secret of the company. If the information is related to any such category then the board of directors must not approve the announcement made under the listing rule 3.1.

To various case laws and according to various listing rules, courts have acknowledged that there is a significant role of disclosure announcements which has to be made by the board of directors but it is important that the first needs to be considered by the board. It is important to know that the announcement may vary from case to case and if the information is sensitive and must not be disclosed under the exceptions of listing rule 3.1 then the same must not be disclosed with ASX. Therefore, it can be said that the board of directors of the entity must not comply with all the announcements made under the listing rules amidst the exceptions provided[14].

There is a certain announcement made under listing rules 3.1 which must be issued immediately and it is the responsibility of the entity to make suitable arrangements for giving appropriate delegations over the announcements. It is important to know that if the entity considered that the announcement is significant then the same must be approved by the entire board before releasing such information. The applicability of exceptions of listing rule 3.1 a will be applied and it is important to consider whether the circumstance is requesting a trading halt or not.

Amidst the current situation of COVID-19, heavy losses have been suffered by the retail and financial institutions in the territory of Australia, and therefore disclosing the facts regarding certain changes in the entities is important under this situation.

So far as Westpac is concerned it must disclose ASX regarding reducing the home loan or any e reduction in the change of market cap, information related to the change of closing share price, or any other information which is likely to change the share price of the entity. Some pieces of information must be disclosed according to the rules and regulations imposed by ASX its listing 3.1[15]. The current COVID-19 situation will bring changes in the analyst and forecast report of the Westpac bank which needs to be disclosed as it is likely to affect the price and value of the relevant securities issued by Westpac.

During the economic deterioration amidst the coronavirus crisis, if any changes or dissemination of announcements are required related to any key changes in the policy of the entity regarding its change in the interest rate provided to the borrowers then the same needs to be disclosed under the disclosure obligations according to 2 sections 674, 675, 677, 678 of the Corporations Act 2001[16]. It is important to know that financial institutions play a major role in uplifting the economic situation of the country and according to listing rules of 3.1 certain information must be disclosed that are market sensitive in nature.

Due to the economic deterioration because of COVID-19, there is the height chance that Westpac may make variations in the material agreement of the financial institution which must be disclosed under listing rule 3.1. it is an undeniable fact that due to the COVID-19 crisis the balance sheet of Westpac is not stable which is material is different from the expectations of the market and according to the guidelines provided under note 8 of ASX when any change of earning from the market expectations is experienced then and the same change and information regarding the financial facility of the entity must be disclosed. It is very likely that due to the current situation the price of securities of Westpac may change and therefore Westpac is obligated to disclose this material information which is market sensitive to ASX.

15. 05. 2020

To,

The Manager,

The Australian Securities Exchange,

The announcement officer

Level 4/20 Bridge Street

NSW 2000, 

Re: change in capital and liquidity ratios

Westpac banking corporation is placed to announce that around 40 billion dollar shares will be landed to small and medium enterprises. A 90 billion dollar term funding facility will also be provided at 2.25% of fixed interest rates. It is important to note that due to the major economic impact due to COVID-19 Westpac is raising equity for 3.5 billion dollars to maintain strong capital buffers during the crisis. Westpac is also looking for raising its funds via placement of 234,578,445 shares that are ordinary live fully paid at $0.0034 each to raise $614,578.70 placement before its cost. The shares of placement will be issued to the sophisticated and institutional investors for the entity. 

This is to bring into your notice that the funds raised under the placement have relied upon the key factors which are as following

• Additional working capital
• Operational activities

It is likely to be expected that these shares will be issued in the next two weeks.

This announcement has been authorized by the CEO of Westpac.

For any other inquiry kindly contact

Peter King (CEO of Westpac)

pking@westpac.com.au

61 412 345 678

Bibliography for Organisation Law

Cases

Forrest v ASIC (2012) HCA 39

Morley v ASIC (2010) NSWCA 331

ASIC v Macdonald (No. 11) (2009) NSWSC 287

ASIC v Hellicar (2012) HCA 17

Acts/Legislations

Section 674, 675, 677, 678 of the Corporations Act 2001

Listing rule 3.1, 3.1 A

Listing Rule 3.1 and section 674

Guidance Note 8, Disclosure obligations.

Journals/Online sources

Svensson, G. “Aspects of sustainable supply chain management: conceptual framework and empirical example”, Supply Chain Management, (2007), 12(4), An International Journal, 262-66

Main, A. Contagion: taking coronavirus’s economic temperature. (2020). Retrieved from: https://www.westpac.com.au/news/in-depth/2020/01/contagion-taking-coronaviruss-economic-temperature/

Schiebel, W. and Pochtrager, S. “Corporate ethics as a factor for success: the measurement instrument of the University of Agricultural Sciences”, Supply Chain Management, (2003), 8(2), An International Journal, 116-21.

IBS Intelligence, Australia’s Westpac bank cautions against COVID-19 scams, assures security guarantee (2020), Retrieved from: https://ibsintelligence.com/ibs-journal/ibs-news/australias-westpac-bank-cautions-against-covid-19-scams-assures-security-guarantee/

Keating, Byron & Quazi, Ali & Kriz, Anton & Coltman, Tim. In pursuit of a sustainable supply chain: Insights from Westpac Banking Corporation. Faculty of Informatics . (2008), 56-78

[1] Keating, Byron & Quazi, Ali & Kriz, Anton & Coltman, Tim. In pursuit of a sustainable supply chain: Insights from Westpac Banking Corporation. Faculty of Informatics . (2008), 56-78

[2] Svensson, G. “Aspects of sustainable supply chain management: conceptual framework and empirical example”, Supply Chain Management, (2007), 12(4), An International Journal, 262-66

[3] Australia’s Westpac bank cautions against COVID-19 scams, assures security guarantee, Retrieved from: https://ibsintelligence.com/ibs-journal/ibs-news/australias-westpac-bank-cautions-against-covid-19-scams-assures-security-guarantee

[4] Schiebel, W. and Pochtrager, S. “Corporate ethics as a factor for success: the measurement instrument of the University of Agricultural Sciences”, Supply Chain Management, (2003), 8(2), An International Journal, 116-21. IBS Intelligence (2020 /

[5] Main, A. Contagion: taking coronavirus’s economic temperature. (2020). Retrieved from: https://www.westpac.com.au/news/in-depth/2020/01/contagion-taking-coronaviruss-economic-temperature/

[6] ASIC v Hellicar (2012) HCA 17.

[7] Main, A. Contagion: taking coronavirus’s economic temperature. (2020). Retrieved from: https://www.westpac.com.au/news/in-depth/2020/01/contagion-taking-coronaviruss-economic-temperature/

[8] Svensson, G. “Aspects of sustainable supply chain management: conceptual framework and empirical example”, Supply Chain Management, (2007), 12(4), An International Journal, 262-66

[9] Morley v ASIC (2010) NSWCA 331

[10] ASIC v Macdonald (No. 11) (2009) NSWSC 287

[11] Section 677 of the Corporation's Act 2001

[12] Listing Rule 3.1 and section 674.

[13] Guidance Note 8, Disclosure obligations.

[14] Forrest v ASIC (2012) HCA 39

[15] Listing rule 3.1, 3.1 A

[16] Section 674, 675, 677, 678 of the Corporations Act 2001

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Law Assignment Help