I am attempting to unpick the 'Wealth Management' side of WBC from what is left.
"BT Financial Group Australia" , a part of Westpac, is an unrelated business to "BT Investment Management Limited", the listed entity.
I need to 'unpick the wealth business' because:
1/ Westpac have reduced their links to the separately listed wealth management arm "BT Investment Management Limited" (BTIM, now renamed 'Pendal Group') to around 10%, with the expectation that this residual holding will be sold.
2/ Westpac have also disestablished their internal wealth management division "BT Financial Group Australia".
This means historical comparisons are going to be difficult from here on in. Westpac have redone their comparatives for FY2018 and FY2017 to account for this latter change at least. But I want to do the full exercise for FY2016 and FY2015 as well.
So let's get on with this unpicking exercise...
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On the FY2018 WBC balance date of 30th September 2018, the Westpac internally owned and managed fund business arm was still called "BT Financial Group Australia"!
By EOFY2019, what was the Westpac division "BT Financial Group Australia" has been split up and the business sub units reallocated within other Westpac divisions. The effect of this can be demonstrated by looking at two different reporting perspectives the reallocation of FY2018 earnings between Westpac divisions in accordance with the table below:
Westpac Business Unit Cash Earnings |
FY2018 (from AR2019 p157) |
FY2018 (from AR2018 p155) |
Difference |
Consumer Bank |
$3,423m |
$3,140m |
+$283m (+9.0%) |
Business Bank |
$2,756m |
$2,159m |
+$597m (+28%) |
BT Financial Group |
$0m |
$645m |
-$645m (-100%) |
Westpac Institutional Bank |
$1,093m |
$1,086m |
+$7m (+0.65%) |
Group Business |
($141m) |
$101m |
-$242m (NM) |
Total Australian Cash Earnings |
$8,065m |
$8,065m |
$0m |
As you can see from AR2019 retrospective reallocation, what was the remaining BT business unit, the 'BT Financial Group' has been 'written out of history' a year down the track.
As was reported in the news at the time:
https://www.smh.com.au/business/bank...19-p515cr.html
"Westpac will continue to provide life insurance and a wealth management platform, Panorama, under the BT banner and will refer clients seeking financial advice to a panel of firms, as it would with people needing accounting or legal advice."
So Westpac still owns the "BT brand" and will still use the BT label on certain products.
"Chief executive Brian Hartzer on Tuesday said selling investment advice had become unprofitable, citing rising costs and the impact of the Future of Financial Advice (FOFA) laws, which banned advisers from receiving commissions on investment products."
This is an extraordinary thing to say when just one year earlier Westpac's internal wealth management division made cash profits of $645m (see above table). However, Hartzer must have only talking about giving 'personal advice'. Only the small bit of the internal wealth business ('personal advice') that hasn't been reallocated (see above table) has been on sold to "Viridian Advisory". So who are 'Viridian Advisory'?
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"Viridian Advisory will take over part of the bank's advice arm while the rest of Westpac's BT Financial Group businesses - private wealth, superannuation, life insurance and investments - will be rolled into its consumer and business banking divisions."