The Westpac Banking Corp (ASX: WBC) share price has pushed higher on Tuesday morning.
In early trade the banking giant's shares are up almost 1% to $26.74.
What happened?
This morning the bank announced that it will be resetting its wealth strategy and making changes to the way it supports customers' wealth and insurance needs.
According to the release, the changes reflect the bank's commitment to supporting customers through their financial lives, while responding to the changing external environment.
Changes include:
- Realigning its major BT Financial Group (BTFG) businesses into the Consumer and Business divisions.
- Exiting the provision of personal financial advice by Westpac salaried financial advisers and authorised representatives.
- Moving to a referral model for financial advice by utilising a panel of advisers or adviser firms.
- Entering into a sale agreement as part of the exit with Viridian Advisory, which will see many BT Financial Advice ongoing advice customers offered an opportunity to transfer to Viridian. A number of the Group's salaried financial advisers and support staff will transition to Viridian from the anticipated completion date of 30 June 2019.
- Simplifying the bank's structure and re-organising Group Executive responsibilities.
- Continuing to invest in the BT brand, reflecting its strength and market position, although BTFG will no longer be a standalone division.
- Unlocking value by exiting a high cost, loss-making business.
Westpac chief executive officer, Mr Brian Hartzer, said: "We are committed to supporting our customers' insurance, investment and superannuation needs as part of our service strategy. The changes we're announcing today are about focusing our investment where we have genuine competitive advantage and growth opportunities."
In aggregate, the changes announced today are expected to be earnings per share positive in 2020 due to exiting a high cost, loss-making business.
The one-off impacts from the transaction and implementation will be spread over both FY 2019 and FY 2020. Management advised that the initial estimates include one off costs of between $250 million and $300 million.
The divisional changes will be effective from April 1, but will not be reflected in Westpac's half year results.
Should you invest?
I think that these changes are a big positive for Westpac and expect it to support its growth over the coming years.
This could make it worth considering an investment in the bank's shares if you don't already have meaningful exposure to the sector. Though, my preference in the sector remains Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) at this point.
