Combating Corporate Spin: Westpac Bank
This week Westpac Banking Corporation released their half year profit figures, along with a predictable press release attempting to make Westpac look wonderful. To say this statement is 'carefully worded to be misleading' would be a touch too charitable!
"In the latest benchmark AC Neilsen Consumer Finance Monitor survey, covering the March 2006 quarter, Westpac was the only one of the major banks to record an increase in the percentage of respondents rating overall service as 'excellent' or 'very good'’. Our rating now stands at 60%, not far off the leading bank."
One would hope Westpac would record the greatest improvement when it comes to customer satsifaction - given they have been sitting at or near the bottom of such surveys for years.
In the University of Auckland business school retail bank survey released in November 2005, Westpac only gained a satisfaction rating of 64% - the lowest of the banks. New Zealand owned TSB and state-owned Kiwibank lead the ratings with 95% each. (Press, 14/11/05, 'Kiwi banks shine')
"An increase in income tax expenses, from $92 million in the half-year to March 2005 to $162 million in the current period, is primarily a result of the unwinding of structured finance transactions in the prior period."
Which is only because Westpac were told off by the Inland Revenue Department for using structured finance transactions the IRD regarded as tax abusive. The taxmen and taxwomen presented Westpac with a lovely large bill, and they continue to investigate the dodgy tax dealings of the banks. Westpac faces a potential tax liability of NZ $611 million (NZ$750 million if you include the interest). More detail here.
"Ann Sherry said Westpac continued to demonstrate its commitment to corporate responsibility with a number of initiatives. These include the installation of '‘talking'’ ATMs in the five major centres, and the raising of more than $500,000 in Westpac's annual chopper appeal in support of rescue helicopter trusts around New Zealand. Â“In the next few months we will also roll out a financial literacy programme, initially to Westpac staff and later to customers and the wider community. "
In 2005 Westpac's "support" for the Westpac Rescue Helicopter included free chopper rides for children of Westpac executives, and eight of their little friends, for a 'special treat' (NZ Herald, 4/3/05, 'Birthday treat on rescue copter'). The executive in question later resigned, with no one saying why. Management thanked her for her "great contribution" to Westpac.
No doubt the aim of the 'financial literacy' programme will be to blame individuals for making poor money management decisions, instead of Westpac demonstrating some real corporate responsibility. Financial union Finsec and others have called on Westpac to change its debt selling practices that encourage people to make poor money management decisions. Of course, the banks make more money when the debt levels of their customers are higher.
The Consumers Institute criticised Westpac in 2005 when it heralded its decision to lower minimum monthly payments from 5% to 3% as "good news" for customers. "Of course its not good news," said David Russell. "Its about keeping people in hock for longer". Westpac staff gain more 'performance points' on their reviews by selling debt products, such as credit cards, than they do for savings products. Profit driven debt selling also places pressure on interest rates. In greedy pursuit of profits, Westpac damages the New Zealand economy.
Last year Westpac were also blamed for fueling an unsustainable 'mortgage price war'. The CEO of Westpac expects the 'war' to flare up again this year.
It should be no surprise that Westpac was one of the co-winners of the 2005 Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand.
There is heaps more in the Westpac statement I could fisk, but that will do for now :)
Tags: New Zealand, Corporates, Westpac