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Wholesale funding overview

Wholesale funding strategy

Westpac’s wholesale funding strategy is focused on building a strong funding profile and broad investor base that will provide the bank with stable and efficiently priced wholesale funding within the parameters of prudent liquidity management. The strategy covers:

Diversification & flexibility

Maintaining funding diversity is a key element of the bank's funding strategy. Diversity is assessed from a number of perspectives including:

  • Currency
  • Retail and wholesale markets
  • Debt product types and maturity term
  • Debt investor types and geographical location

Another key aspect of the strategy is to have the maximum flexibility to access the widest range of funding markets, debt investors and products. This approach enables the Group to adjust the sources of its funding as market preferences and investor demands change. As a result, the Group operates in a variety of jurisdictions and operates a globally integrated approach to debt pricing and risk management along with an efficient chain of delegated authorities that allows the Group to effectively and responsively execute transactions.

Investor focus

In managing its funding programmes, the Group takes a long term approach ensuring investors remain fully informed and supported. This process includes:

  • Providing transparent and comprehensive information on the Bank’s current credit, business and funding position and making this directly available to investors and intermediaries
  • Significant energy and internal due diligence is put into each public transaction to ensure the deal structure, syndicate group, pricing, maturity and timing is right for investors and the market at launch
  • Continuing to build a strong international profile through regular domestic and international deal and non-deal roadshows
  • Maintaining a dedicated Debt investor relations function to proactively meet the needs of investors

Management of global funding

The management and execution of the wholesale funding strategy is the responsibility of Group Treasury. Within Group Treasury, the Global Funding unit manages Westpac's offshore and domestic issuance programs.

Contact the Global Funding team

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Issuing entities

The Westpac Group currently issues through the following entities:

For more details regarding the debt programs for the above Issuers see Secured funding or Unsecured funding.

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Wholesale funding profile

Outstanding wholesale funding

The following table represents the Westpac Group’s wholesale funding as at 31 March 2015:

As at 31 March 2015
A$M

Wholesale funding - residual maturity
Securitisation
Greater than 12 months
6 to 12 months
Less than 6 months
Long term to short term scroll


12,482
103,294
16,685
70,935
30,613

Total wholesale funding

234,009

Term debt issuance and maturity profile1 (A$bn)

Wholesale funding graph

1 Based on residual maturity and FX spot currency translation. Includes all debt issuance with contractual maturity greater than 370 days, excluding US Commercial Paper and Yankee Certificates of Deposit. Contractual maturity date for hybrids and callable subordinated instruments is the first scheduled conversion date or call date for the purposes of this disclosure. Perpetual sub-debt has been included in >FY20 maturity bucket. Maturities exclude securitisation amortisation.

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Key Capital Ratios

Key capital ratios (APRA Basel III) (%) 1H14 2H14 1H15
Common equity tier 1 ratio
Additional tier 1 capital
Tier 2 capital
Total regulatory capital ratio
8.8
1.5
1.8
12.1
9.0
1.6
1.7
12.3
8.8
1.5
1.8
12.1
Risk weighted assets $322bn $331bn $347bn
Common equity tier 1 ratio (Internationally comparable basis1) 13.1 13.1 12.7

1 Internationally comparable basis based on PwC report available at Australian Bankers' Association.

Westpac operates under the advanced Basel II methodologies for assessing risk and capital. As part of this process Westpac reports its capital and risk management practices on a quarterly basis in its Pillar 3 Report. Find more information and Westpac’s Pillar 3 reports here.

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Liquid Assets

Westpac Treasury holds a portfolio of high-quality liquid assets as a buffer against unforeseen funding requirements. These assets are 100% eligible for repurchase agreements with the Reserve Bank of Australia or another central bank and are held in cash, Government, State Government and highly rated investment grade paper. The level of liquid asset holdings is reviewed frequently and is consistent with both the requirements of the balance sheet and market conditions.

As at 31 March 2015, Westpac held in total $136.7 billion in unencumbered liquid assets (30 September 2014: $134.4 billion). This portfolio provides a source of reserve liquidity as eligible collateral under the Central Bank repurchase agreement facility. At 31 March 2015 the portfolio was comprised of:

  • $57.0 billion of cash, deposits at Central Banks, Government and semi-Government bonds. This portfolio increased $2.4 billion during the half as the Group prepared for the introduction of the LCR;
  • $19.2 billion of repo-eligible private securities; and 
  • $60.5 billion of self-originated AAA rated mortgage backed securities, which in extraordinary circumstances are eligible for repurchase with the RBA or the RBNZ.

LCR

From 1 January 2015, Westpac is required to meet a minimum LCR of 100% in accordance with the APRA liquidity standard (APS 210). The LCR requires banks to hold sufficient high-quality liquid assets (HQLA), as defined, to withstand 30 days under a regulator-defined acute stress scenario. Given the limited amount of qualifying HQLA available in Australia (due to relatively low levels of Government debt outstanding), the Reserve Bank of Australia (RBA) makes available to Australian institutions a Committed Liquidity Facility (CLF) that, subject to the satisfaction of qualifying conditions, can be accessed to assist meeting the LCR requirement. In order to have access to the CLF, Australian banks are required to pay a fee of 15 basis points (0.15%) per annum to the RBA on the approved CLF. Westpac has approval for a CLF of $66 billion for calendar year 2015. At 31 March 2015, the Group's LCR, including the CLF of $66 billion, was 114%.

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Financial Reporting

Westpac Group reports full financial results twice a year to the market (see current reporting calendar). The First Half Results for the period ended 31 March include a media release, Interim Results Announcement and Investor Discussion Pack. The Full Year Results for the year ended 30 September include a media release, Full Year Results Announcement, Investor Discussion Pack, Annual Report and Annual Review.

Westpac maintains United States Securities and Exchange Commission (SEC) registration and in addition to the above financial reports also lodges the following reports with the SEC:

  • Annual Report on Form 20-F
  • Interim Profit Announcement on Form 6-K

For more detail select the following links below:

  • Results Announcement: The Results Announcement includes management’s discussion of the outlook and financial performance of Westpac Group at both a Group and a divisional level
  • Investor Discussion Pack: The Investor Discussion Pack is a slide presentation that further illustrates the Westpac Group Results and includes sections covering Capital, Funding, Liquidity and Asset Quality
  • Annual Reports.

For more information on Westpac Group

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