Westpac hangs on to prized contract of NSW state banker
With few signs of credit growth among big corporate clients, institutional bankers are competing fiercely for business - including handling the transactional needs of governments.
Westpac's contract with the NSW government, which involves handling payments to 386,000 public servants and managing revenue collection such as car registration, is the biggest government banking contract in the country.
At a ceremony to mark the deal on Friday, attended by NSW Treasurer Mike Baird and Westpac chief executive Gail Kelly, the bank's institutional boss Rob Whitfield said it was eyeing further government banking contracts.
It currently holds government banking contracts in Victoria, the ACT, and New Zealand, and Mr Whitfield said it would be "actively participating" when the Queensland government's contract went out to tender next year.
Commonwealth Bank currently provides banking services to the Sunshine State's government.
Mr Whitfield said credit growth across the corporate market was "extremely benign," and competition for institutional business such as the NSW deal was "extremely strong".
"If you look at financing levels, or business credit growth, it's really still going nowhere," he said.
"That doesn't make us hungrier just for government business, it makes us hungrier for all of our customers' business, regardless of the industry sector they are in."
The NSW Labor opposition last year argued Westpac should lose the deal after it replaced workers in the state with lower-paid staff overseas. Mr Whitfield argued this was too simplistic, saying the bank was in fact creating more jobs in NSW.
The bank would not disclose the value of the contract but it has previously been estimated to be worth $40 million over five years.
Frequently Asked Questions about this Article…
Westpac this month renewed the lucrative contract to act as the NSW government's banker. The deal involves handling payments to 386,000 public servants and managing revenue collection such as car registration — and is described in the article as the biggest government banking contract in Australia.
According to the article, Westpac's role includes handling transactional needs for the NSW government: making payments to public servants and managing revenue collection tasks such as car registration.
Westpac would not disclose the value of the renewed contract. The article notes it has previously been estimated at about $40 million over five years, but the bank did not confirm a current figure.
The article says Westpac currently holds government banking contracts in Victoria, the ACT and New Zealand. It also plans to "actively participate" when the Queensland government's contract goes to tender next year.
The article reports that institutional bankers are competing fiercely for government and transactional business because credit growth among big corporate clients is showing few signs of pick-up. Westpac’s institutional boss Rob Whitfield described corporate credit growth as "extremely benign" and competition for institutional business as "extremely strong," which is driving the bank to seek more government opportunities.
Yes. The NSW Labor opposition previously argued Westpac should lose the deal after the bank replaced some state-based workers with lower-paid staff overseas. Rob Whitfield told attendees that this view was too simplistic and said Westpac was in fact creating more jobs in NSW.
The article says the ceremony was attended by NSW Treasurer Mike Baird and Westpac chief executive Gail Kelly. Westpac’s institutional boss Rob Whitfield also spoke about the bank’s government-banking plans.
The article does not discuss Westpac's share price, dividends or direct market impact. It does make clear the NSW contract is a significant government-banking mandate — previously estimated around $40 million over five years — and that Westpac is pursuing more government business amid weak corporate credit growth and strong competition in institutional banking. Investors interested in the company may want to note the strategic emphasis on government transactional work described in the article.
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