Gail Kelly demands action at St George
(17 February – Australia) Westpac Banking Corporation’s chief executive Gail Kelly has ordered a dramatic shake-up of subsidiary St George after the bank suffered a serious slump in residential lending.
Mrs Kelly revealed during Westpac's first-quarter trading update that she was disappointed with St George's current lending levels, especially in its key markets of NSW and South Australia.
The bank did not reveal the exact slowdown, but Mrs Kelly said its recent new mortgage growth was below 'system' -- the banking industry average -- which is about 7 percent a year.
The major banks aim to grow at or above that rate.
Mrs Kelly said she had ordered St George's new chief executive, Rob Chapman, to overhaul the business and strengthen the lending book.
'I really was disappointed, its lending has fallen away sharply,' Mrs Kelly said.
'It did not grow at the levels that it should have been able to. But Rob had his hand at the tiller, he's out growing the business and I'm confident we have the momentum up there now.'
The overhaul of the business began last year and concentrated on creating regional hubs, abolishing broker networks and reducing exposure to commercial property loans.
Mrs Kelly said 2010 'was the year that we went through and restructured the St George business and took it back to its regional roots.
'We have shifted the bank back to its heartland of NSW and SA. We know there's a set of customers that prefer to bank with a regional, or a local, non-major bank.
'We also really wanted to really reduce the relation on third-party broker networks in NSW and SA, where there is already really good distribution with St George.'
The bank has cut the number of loans written through broker channels from 50 percent of new business to 40 percent.
It also cut commercial property loans by A$10 billion.
The bank did not reveal the exact slowdown, but Mrs Kelly said its recent new mortgage growth was below 'system' -- the banking industry average -- which is about 7 percent a year.
The major banks aim to grow at or above that rate.
Mrs Kelly said she had ordered St George's new chief executive, Rob Chapman, to overhaul the business and strengthen the lending book.
'I really was disappointed, its lending has fallen away sharply,' Mrs Kelly said.
'It did not grow at the levels that it should have been able to. But Rob had his hand at the tiller, he's out growing the business and I'm confident we have the momentum up there now.'
The overhaul of the business began last year and concentrated on creating regional hubs, abolishing broker networks and reducing exposure to commercial property loans.
Mrs Kelly said 2010 'was the year that we went through and restructured the St George business and took it back to its regional roots.
'We have shifted the bank back to its heartland of NSW and SA. We know there's a set of customers that prefer to bank with a regional, or a local, non-major bank.
'We also really wanted to really reduce the relation on third-party broker networks in NSW and SA, where there is already really good distribution with St George.'
The bank has cut the number of loans written through broker channels from 50 percent of new business to 40 percent.
It also cut commercial property loans by A$10 billion.
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