Westpac’s Share Price Sinks Lower Amidst Fears of Potential Lawsuit

Westpac Banking Corporation’s [ASX:WBC] share price continued its downwards trend this morning, falling 0.51% shortly after opening.

The bank has lost nearly 10% of its share value in less than a month following a $35 million settlement with ASIC over a breach in responsible lending laws. You can find details of the settlement in my article from last week.

At time of writing, Westpac’s share price is sitting at $27.59 — down just over 13% from this time last year.

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Westpac’s potential lawsuit

As reported by the ABC, Westpac could face a lawsuit by its customers, funders and investors for the lack of care with lending control.

Josh Mennen, a principal at law firm Maurice Blackburn, told the ABC that Westpac’s admission to the breach puts the bank at risk of a civil action by customers provided with too much credit:

In circumstances where people find themselves in default on their mortgages they will be able to bring an action against Westpac, potentially, for breaches of responsible lending laws.

It is early days in relation to any class action, but I don’t think anyone who has been following this could seriously rule out the possibility of a class action being brought.

In addition, the ABC highlighted that if default rates rise, international investors who funded Westpac mortgages or invested in residential mortgage-backed securities could also have a case.

What can we expect to see?

It is early days, so there’s no way of telling exactly how this will play out just yet. Although, the fact that the spotlight is not only on Westpac right now, but the whole financial industry, is an upside for the bank.

Investors will be hoping that Westpac has what it takes to get this under control.

Regards,

Ryan Clarkson-Ledward,
For Markets & Money

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Ryan Clarkson-Ledward is a junior analyst for Markets & Money. Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers. Ryan’s work with Sam is designed to provide research that complements Sam’s analysis for small-cap and technology stocks. Together, their objective is to break through all the jargon and give you the hard facts to inform your investment decision-making. Ryan writes for:


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