AMP Limited (AMP):
A third class action has been formally lodged against AMP over the scandals revealed at the banking royal commission and the resulting damage to the embattled financial giant’s market value. Shine Lawyers on Friday filed a statement of claim in the Federal Court of Australia, arguing AMP (AMP) engaged in misleading and deceptive conduct and failed to disclose material information to the market. AMP, which has admitted charging customers fees for financial advice that was never delivered and then lying to the corporate watchdog about it, is also facing class action proceedings from law firms Quinn Emanuel Urquhart & Sullivan and Phi Finney McDonald. Earlier this month, both Slater and Gordon and Maurice Blackburn announced plans to bring a class action against AMP, bringing to five the number of proposed or filed shareholder lawsuits against the embattled financial services group. AMP’s share price tumbled after head of financial advice Jack Regan admitted the company misled the Australian Securities and Investments Commission 20 times — an admission from which the company has since walked away. The scandal also resulted in the early exit of chief executive Craig Meller, the sacking of general counsel Brian Salter and the resignations of chairman Catherine Brenner and directors Patty Akopiantz, Holly Kramer and Vanessa Wallace. AMP also suffered a record “strike” against its remuneration report of 61.5 per cent at its annual meeting last week.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank and the anti-money laundering regulator Austrac have missed a deadline to strike a deal in court-ordered mediation talks. But lawyers for both the regulator and the lender are continuing to attempt to find middle ground over what an appropriate fine against the nation’s largest bank may be. In a statement today, the bank said talks were ongoing. The Federal Court had ordered the parties to come to a settlement by May 25. “The parties have been engaged in mediation and discussions are continuing,” CBA said. If the mediation fails and the dispute goes to trial, the next case management hearing is scheduled for December 7. CBA has put aside $375 million in a provision for possible penalties stemming from Austrac’s allegations last August that the bank had breached anti-money laundering legislation more than 50,000 times. In the bank’s statement of defence, CBA has admitted many of the claims, but has argued many of the individual breaches should be treated as a single breach. Austrac has accused the bank of failing to send tens of thousands of legally-required transaction reports to the regulator. CBA’s intelligent deposit machines, which were rolled out in 2012, failed to automatically send the regulator information about potential washing of money through its smart ATMs by criminal syndicates and terrorist financiers.
Fortescue Metals Group Limited (FMG):
Fortescue Metals Group said it will pay back another $US160 million in debt to complete a multiyear restructuring of its loans. The Australian iron ore producer said it has issued a voluntary redemption notice for the balance of its 9.75 per cent senior secured notes due in 2022. The notes will be repaid from operating cash flow, Fortescue said. “The repayment of the high-cost notes now leaves all of Fortescue’s remaining debt structured on investment grade terms and conditions, providing a low cost, flexible capital structure to support our ongoing operations and future growth,” chief financial officer Ian Wells said.
National Australia Bank Ltd. (NAB):
The Finance Sector Union has seized on a National Australia Bank executive's comment that false witnessing of documents in its advice business was a "cultural" issue as the union pushes for lighter penalties for planners who admitted to the breaches. Planners at NAB who acknowledged breaching the bank's policies on how a key superannuation form was signed - a problem revealed by Fairfax Media last year - have had their bonuses cut by 25 per cent. They have also been issued with a "compliance breach," and told that the bank would make an "adverse" comment to prospective employers under the banking industry's reference sharing and information sharing protocol, the union says. The breaches in question involved staff wrongly witnessing a form that authorises who gets a client's superannuation when they die. In October last year NAB said the problem had occured about 2,000 times. In a letter sent to NAB this week, the FSU argued the penalties handed out to planners were not consistent with those for senior management over the incident, which were explored at the royal commission last month. Instead, the FSU called for a 10 per cent cut in planner bonuses, and for staff records to be changed, arguing this would be consistent with comments to the commission from Andrew Hagger, NAB's chief customer officer for consumer and wealth. The union emphasised that Mr Hagger last month told the commission he had informed the NAB board the false witnessing problems were both a "failure of discipline" and a "cultural matter."
Telstra Corporation Ltd (TLS):
Telstra may be struggling to hold the line on dividends but there might be some light at the end of the tunnel for the telco. According to UBS analysts, who have raised Telstra to a buy, using mobile technology to bypass the NBN could be the ticket for the telco to swim its way out of trouble. The telco has a strategic update scheduled in June and UBS analyst Eric Choi said that the event could prove to be a “positive catalyst”. While the market has a firm idea of the headwinds Telstra is facing there’s little clarity on how it can use mobile technology to tackle the pressure posed to its earnings by the National Broadband Network. According to Mr Choi, the June update could shed more light on that front. “Telstra has stated it will highlight how its $3 billion strategic capex and cost-out will allow it to be more ‘bold’,” he said. “With Telstra under increasing pressure to combat near-term operational pressures, and its assertions that it needs to be ‘bolder’ — we now think mobile bypass (5G or otherwise) could come earlier than anticipated. “Given recent product launches, we even ponder if Telstra could launch ‘unlimited’ (with capped 4G quotas) mobile broadband plans,” he said.
TPG Telecom Ltd (TPM):
TPG Telecom's aggressive entry into the intensely competitive Australian mobile market is set to shake the ground underneath Telstra, Optus and Vodafone Hutchison Australia. But questions remain over the quality of a network being built for just $600 million, and if TPG can make any money from its ambitious plans. TPG won't make any money from each mobile subscriber for their first six months after unveiling a scorchedearth strategy based on a $0 unlimited data plan. Subscribers will then be charged $9.99 a month. But the fine print is key to understanding the strategy, at least in the short term. TPG's advertising pitch to would-be users is that the first plan is mobile data only, no voice included. TPG won't make traditional voice calls available until later down the road.
Wesfarmers Ltd (WES):
Wesfarmers’ disastrous two-year experiment to roll out its Bunnings hardware stores in Britain and Ireland has come to a crashing end, with the Perth-based conglomerate announcing it will divest its Homebase UK business to private equity firm Hilco Capital. Wesfarmers will sell the UK hardware chain for a pittance compared to the $705 million it paid for it in 2016, on top of the $1 billion in writedowns it also took on the business this year. The Perth-based conglomerate said it will record a loss on disposal of the business of £200 million to £230m ($353m-$406m) in the group’s full year 2018 results, subject to review by Ernst & Young. Under the terms of the agreement announced this morning, Wesfarmers will sell all the Homebase assets, including the Homebase brand, its store network, freehold property, leases and inventory for a nominal amount. However, Wesfarmers will reserve some possible upside for the deal, with it to be entitled to a 20 per cent stake in any equity distributions from the business in the future. This part of the deal won’t be limited by time, meaning Wesfarmers could get some money back and participate in any profitable divestment of the business in the long-term by Hilco.
Westpac Banking Corp (WBC):
Westpac’s head of commercial banking, Alastair Welsh, has admitted he himself doesn’t understand legal documents the bank relied upon to “quarantine” a $100,000 term deposit it demanded from customers the bank mistreated over a small business loan. The bank also failed to make “full and fair” disclosure of what it knew about the case when customer Bradley Wallis and his wife complained to the Financial Ombudsman Service, Mr Welsh told the financial services royal commission this morning. Mr Welsh admitted Westpac subsidiary Bank of Melbourne did the wrong thing by putting a “hard hold” on the term deposit, which it demanded from Mr Wallis and his wife when they sought to discharge one of their two mortgages with the bank, secured against a residential property at Port Macquarie in NSW. At the time, bank officials were concerned about the loan-to-valuation ratio of the other loan the couple held with the bank, which they took out to buy a bed and breakfast at Byabarra, inland from Port Macquarie. Mr Welsh has admitted to the royal commission that the $516,000 loan was wrongly classified as a residential loan, when it should have been a commercial loan.
(Source: AIMS)
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