(Reuters) - Westpac Banking Corp (AX:WBC) on Thursday said it was entrusting acting chief executive Peter King with the role for two years to bring leadership stability amid the coronavirus pandemic after the company was rocked by a money laundering scandal.
King, Westpac's former chief financial officer, has been acting CEO since his predecessor left late last year following allegations the bank facilitated millions of breaches of anti-money laundering laws including enabling payments to known child exploiters.
Australia's second largest lender had carried out a global search for a permanent CEO but chairman John McFarlane said the company had determined that management stability was vital in times of economic stress and uncertainty.
McFarlane said given the level of uncertainty triggered by the coronavirus pandemic "it is difficult to make a reasonable assessment of its potential impact at the moment, we expect to see a rise in our credit provisioning this year and probably beyond".
A two-year contract is unusual for a new CEO signing on to lead one of Australia's biggest companies. King had announced his retirement just two months before the money-laundering bombshell dropped in November, and agreed to delay that retirement plan to take up the CEO reins.
King will lead the bank at a time when economies and financial markets around the world convulse from sweeping shutdowns, including in Australia, intended to slow the spread of a new coronavirus that has killed nearly 50,000 people. In Australia, about 5,100 have been infected and 23 people have died.
The Australian central bank has enacted extraordinary measures to prop up the economy including quantitative easing and buying bonds, and lenders like Westpac have slashed loan rates and frozen repayments to soften the blow of a recession that most economists say is inevitable.
Easing the burden on businesses faces, however, brings with it rising loan losses, and given the uncertain timeline of the crisis, for an untold period of time.
Australian Prime Minister Scott Morrison has pledged A$320 billion in fiscal support, more than 15% of annual economic output, in a bid to keep the economy running.
King said in a statement that Westpac would focus on responding to the coronavirus crisis.
"We have a critical role to play alongside government and regulators in supporting Australians and New Zealanders and our countries' financial systems," he said.
McFarlane said the company's CEO and executive short-term bonuses for 2020 would be canceled due to the alleged breach of anti-money laundering laws.