Okay, I had to look them up, they are not the biggest bank in the world. Wikipedia rank them as 48th, with US$642 billion in assets. Westpac is one of the biggest four banks in Australia.
However, apparently their trading in currencies has been blighted.
A friend who rang me in distress gave me this story.
He went to his long standing bankers because he did not want to transact a large sum of his money over the net.
Went to the teller to exchange AUS250,000 into British Pounds, asking for a bank cheque.
The teller said it would be cheaper using a bank draft. A$45.
The teller also said that with a bank cheque you cannot be sure if the British bank will accept it.
Then quoted the exchange rate. It appeared substantially more expensive than my friend had obtained from another friend in treasury in another bank. So he negotiated hard.
Eventually he paid a 5% spread on the wholesale currency exchange rate to the teller rate. That is correct, a good A$12,500+.
My friend then asked the manager of the branch, who by then had joined the teller, wasn't she ashamed to be charging such costs for exchanging money......and she relied "no, the currency traders need a margin to cover their risk".
Other than proving there is an oligopoly in Australia, and the disgraceful charging regime, this story tells a few other pointers.
Westpac's currency traders are either completely hopeless; or the new risk policy of requiring a 5% spread to trade currencies represents the policy of the bank for risk management purposes. Covering past losses? And that tells you a lot about the board, and the executives, and their risk strategy and their ultimate capacity to earn profits.
Second, and completely supporting this conclusion, for a teller to tell a customer that a British Bank may not accept a Westpac bank cheque, is tantamount to a red flag about the sustainability of its business.
I mean if other banks aren't accepting their bank cheques, then why would we?
Not sure if this is a BUY or a SELL story.
I told him to move his banking to another bank. Better still, move overseas.
However, apparently their trading in currencies has been blighted.
A friend who rang me in distress gave me this story.
He went to his long standing bankers because he did not want to transact a large sum of his money over the net.
Went to the teller to exchange AUS250,000 into British Pounds, asking for a bank cheque.
The teller said it would be cheaper using a bank draft. A$45.
The teller also said that with a bank cheque you cannot be sure if the British bank will accept it.
Then quoted the exchange rate. It appeared substantially more expensive than my friend had obtained from another friend in treasury in another bank. So he negotiated hard.
Eventually he paid a 5% spread on the wholesale currency exchange rate to the teller rate. That is correct, a good A$12,500+.
My friend then asked the manager of the branch, who by then had joined the teller, wasn't she ashamed to be charging such costs for exchanging money......and she relied "no, the currency traders need a margin to cover their risk".
Other than proving there is an oligopoly in Australia, and the disgraceful charging regime, this story tells a few other pointers.
Westpac's currency traders are either completely hopeless; or the new risk policy of requiring a 5% spread to trade currencies represents the policy of the bank for risk management purposes. Covering past losses? And that tells you a lot about the board, and the executives, and their risk strategy and their ultimate capacity to earn profits.
Second, and completely supporting this conclusion, for a teller to tell a customer that a British Bank may not accept a Westpac bank cheque, is tantamount to a red flag about the sustainability of its business.
I mean if other banks aren't accepting their bank cheques, then why would we?
Not sure if this is a BUY or a SELL story.
I told him to move his banking to another bank. Better still, move overseas.
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