UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

Commission File Number: 1-10167

WESTPAC BANKING CORPORATION
Australian Business Number 33 007 457 141
(Exact name of Registrant as specified in its charter)

New South Wales, Australia
(Jurisdiction of incorporation or organization)

275 Kent Street, Sydney, NSW 2000, Australia
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act:  None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: 4.20% Notes Due February 27, 2015 and 4.625% Subordinated Notes Due 2018

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Ordinary shares                                                                         2,940,946,145 fully paid

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x    No o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes o    No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x    No o

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer x       Accelerated Filer o       Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o   International Financial Reporting Standards as issued by the International Accounting Standards Board x

Other o

If this is an annual report, indicate by check mark whether the registrant is a shell company.

Yes o    No x

2009 Annual Report

The Westpac Group Annual Report 2009

Westpac Banking Corporation

ABN 33 007 457 141

Information contained in or accessible through the web sites mentioned in this Annual Report does not form part of this report unless we specifically state that it is incorporated by reference and forms part of this report. All references in this report to web sites are inactive textual references and are for information only.

Table of contents

In this Annual Report references to ‘Westpac’, ‘Group’, ‘The Westpac Group’, ‘we’, ‘us’ and ‘our’ are to Westpac Banking Corporation ABN 33 007 457 141 and its subsidiaries unless they clearly mean just Westpac Banking Corporation.

In this Annual Report references to ‘St.George’ are to St.George Bank Limited ABN 92 055 513 070 and its subsidiaries unless they clearly mean just St.George Bank Limited.

For certain information about the basis of preparation of the financial information in this Annual Report see ‘Reading this report’ in Section 2. In addition, this Annual Report contains statements that constitute ‘forward-looking statements’ within the meaning of section 21E of the US Securities Exchange Act of 1934. For an explanation of forward-looking statements and the risks, uncertainties and assumptions to which they are subject, see ‘Reading this report’ in Section 2.

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Form 20-F cross-reference index

(for the purpose of filing with the United States Securities and Exchange Commission)

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3

Guide 3 cross-reference index

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Section 1

Information on Westpac

Corporate governance

Directors’ report

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Information on Westpac

Westpac is one of the four major banking organisations in Australia and, through our New Zealand operations, we are also one of the largest banking organisations in New Zealand. We provide a broad range of banking and financial services in these markets, including retail, business and institutional banking and wealth management services.

We have branches, affiliates and controlled entities(1) throughout Australia, New Zealand and the near Pacific region, and maintain offices in some of the key financial centres around the world.

We were founded in 1817 and were the first bank established in Australia. In 1850 we were incorporated as the Bank of New South Wales by an Act of the New South Wales Parliament. In 1982 we changed our name to Westpac Banking Corporation following our merger with the Commercial Bank of Australia. On 23 August 2002, we were registered as a public company limited by shares under the Australian Corporations Act 2001 (Corporations Act).

The 2009 financial year marked a strategically important and transformational period for the Group, with the completion of the merger with St.George Bank Limited on 1 December 2008. The merger provides us with an enhanced growth platform, an expanded customer base, greater distribution capability, an enhanced suite of products and an improved efficiency profile. In addition, we believe that by maintaining and indeed investing more in the separate brands, including Westpac, St.George, RAMS, BankSA, BT Financial Group and Asgard, the Group has increased its strategic flexibility to better meet customer needs.

As at 30 September 2009, our market capitalisation was $77.2 billion(2) and we had total assets of $589.6 billion.

Business strategy

Our vision is to be the leading financial services company in Australia and New Zealand.

We see our fundamental purpose as helping every customer achieve all their financial goals.

Our ambition is to earn all of our customers’ business by delighting them with the service and support that we provide and by serving them as a single team.

Our strategy focuses on customers in our core markets of Australia, New Zealand and the near Pacific region and is based on:

·         developing a deep understanding of our customers’ needs;

·         providing value-added solutions that seek to meet those needs;

·         deepening and building long-term customer relationships; and

·         dramatically improving the experience they have with us.

We have strong values, which are well embedded in our culture. We believe that the following values will help us deliver our strategy:

·         working as one team;

·         delighting customers;

·         integrity;

·         achievement; and

·         valuing each other.

Strategic priorities

Our strategic priorities are particularly centred on improving our distribution and customer offerings, specifically to:

a)    drive a strong, active customer-centric culture to delight our customers by

·         putting the customer at the centre of everything we do;

·         establishing and driving high performing and locally empowered businesses very close to the communities they serve;

·         developing and implementing compelling customer segment strategies, bringing banking and wealth management together for the customer; and

·         strengthening the skills and depth of our people;

b)    become easier to do business with

·         by having processes and solutions designed from the customers’ perspective;

·         through a focus on convenience, simplicity and flexibility; and

·         by achieving integration across all channels.

c)     realise our multi-brand advantage by

·         having a clear, shared vision of success across the Group;

·         offering an even greater choice to customers; and

·         continuing to invest in and support the individual brands across The Westpac Group.

d)    invest in operations improvements to

·         transform service delivery, redesigning processes end-to-end from a customer perspective; strengthen technology capabilities to increase the reliability and consistency of service;

·         focus on driving productivity, eliminating duplication to provide headroom for additional investment; and

·         launch a multi-year technology transformation program to renew our overall technology base.

e)     lead in reputational and sustainability matters

·         by ensuring that each decision we make is consistent with our customer-focused strategy, and by continuing to actively support the communities in which we operate;

·         through further embedding sustainability concepts in all elements of our businesses;

(1)     Refer to Note 39 to the financial statements for a list of our controlled entities as at 30 September 2009.

(2)      Based on the closing share price of our ordinary shares on the Australian Securities Exchange as at 30 September 2009.

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·         through on-going joint endeavours with our non-profit partners; and

·         by continuing to develop strong risk management capabilities as a competitive advantage.

By putting the customer at the centre of everything we do, engaging our customers through brands they know and trust, and focusing on the key elements of customer advocacy, we believe we will realise our vision to be the leading financial services company in Australia and New Zealand.

Organisational structure

Our operations comprise the following five key customer-facing business divisions operating under multiple brands, serving around 10 million customers(1):

·         Westpac Retail and Business Banking, which we refer to as WRBB, is responsible for sales, marketing and customer service for all consumer and small-to-medium enterprise customers within Australia under the ‘Westpac’ and ‘RAMS’(2) brands;

·         St.George Bank is responsible for sales, marketing and customer service for our consumer, business and corporate customers in Australia under the St.George brand. It also includes the management and operation of BankSA;

·         BT Financial Group Australia, which we refer to as BTFG, is Westpac’s wealth management business. As a result of the merger with St.George, BTFG now includes operations under the Asgard, Advance, Licensee Select, Magnitude, BankSA, and Securitor brands. BTFG designs, manufactures and distributes financial products that are designed to help our customers achieve their financial goals by administering, managing and protecting their assets;

·         Westpac Institutional Bank, which we refer to as WIB, delivers a broad range of financial services to commercial, corporate, institutional and government customers either based in or with interests in Australia and New Zealand. Customers are supported through Westpac branches and subsidiaries located in Australia, New Zealand, New York, London and Asia; and

·         New Zealand Banking, which provides a full range of retail and commercial banking and wealth management products and services to consumer and business customers throughout New Zealand. New Zealand Banking operates under the Westpac New Zealand, Westpac Life New Zealand and BT New Zealand brands.

Other business divisions in the Group comprise:

·         Pacific Banking, which provides banking services for retail and business customers throughout near South Pacific Island Nations;

·         Group Treasury, which is primarily focused on the management of the Group’s interest rate risk and funding requirements;

·         Product and Operations, which is responsible for consumer and business product development and operations;

·         Technology, which is responsible for developing and maintaining reliable and flexible technology capabilities and technology strategies; and

·         Core Support, which comprises those functions performed centrally including finance, risk, legal and human resources.

These businesses are described in more detail in Section 2, including a summary of net profit and total assets by business division and management discussion and analysis of business division performance.

Structure chart of our businesses

(1)                   All customers, primary and secondary, with an active relationship (excludes channel only and potential relationships) as at 30 September 2009.

(2)      RAMS Home Loans is a home loan franchise distribution business.

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Competition

The Australian financial services market is strongly competitive and is likely to become more so as the economy recovers from the current slowdown.

The competition for deposits, in particular, has intensified and may increase further.

We expect competition within the lending market to further intensify as all competitors respond to the changing conditions.

The New Zealand economy has suffered a more significant slowdown in economic activity than Australia. While a number of smaller non-bank institutions have exited the New Zealand market, competition has remained strong.

Outlook(1)

The 2009 financial year was a period of significant change, starting the year in the midst of the global financial crisis, with the world economy deep in recession and ending the year with some economies beginning to recover, confidence improving in Australia and the most intense impact of the financial crisis waning. Through the 2009 financial year, Australia avoided a technical recession and navigated the global downturn, due in part to a strong financial sector, pro-active monetary and fiscal stimulus and Australia’s exposure to the Chinese economy, which rebounded strongly.

The Australian economic outlook for the 2010 financial year is positive overall, and we believe that real GDP growth will be above 2% in the 2010 calendar year. However, we expect conditions to be uneven across the economy, as is typical in the early stages of recovery. A strong upturn in housing construction and a pick-up in Australian Government investment spending are expected to support growth. Current measures of both business and consumer confidence in Australia also point to improved spending. However, ongoing uncertainty about the aftermath of the global financial crisis and the partial reversal of highly stimulatory monetary and fiscal policies are likely to ensure that households and businesses remain cautious.

From a banking sector perspective, Australian credit growth is expected to remain relatively subdued over the coming year from the impacts and lessons from the global financial crisis. We expect housing credit growth to remain at similar levels to the 2009 financial year and business credit growth to continue to experience softness, with the deleveraging process having further to run. Average funding costs are also likely to rise given the intense competition for retail deposits and as wholesale funding continues to be sourced at a cost well above pre-global financial crisis levels.

For The Westpac Group, the 2009 financial year was a transformational year. The Group not only successfully navigated the global financial crisis, but ended the year in strong shape with increased capital ratios, higher provision cover and improved liquidity. The merger with St.George was also a catalyst, increasing the scale and reach of our organisation while our multi-brand strategy created an organisation that can better meet different customer needs. The Group has consistently grown at above financial system growth, with particular strength in key targeted areas of mortgages, deposits and superannuation. In the latter quarter of the 2009 financial year, improving asset markets, particularly equities, has given good momentum to our wealth management business and we are beginning to see new customer flows.

The 2010 financial year will not be without its challenges. In particular, fee income is likely to be lower following changes to fee structures implemented over the year. Treasury and markets income was also very high in the 2009 financial year, and is unlikely to be matched in the year ahead as the significant volatility that contributed to the gains has now abated.

It is important to note that the global financial crisis is likely to have a lasting impact on the operating environment. This is particularly true for the financial system where risk appetites have changed and business models have adjusted.

Changes in the global regulatory environment are also underway, seeking to address some of the systemic issues that emerged in world markets. While some change is inevitable in Australia, we believe the initiatives already undertaken by Westpac to enhance funding, grow liquidity and strengthen our balance sheet puts us in a solid position to respond.

With Australian economic activity improving, The Westpac Group is seeing positive trends in its portfolio, with the growth in stressed assets moderating. The Australian consumer sector has performed very well through this cycle and we expect the sector to continue to perform well in the year ahead.

The merger with St.George is set to continue to deliver benefits in the 2010 financial year, with the full period impact of prior synergies to flow through, and as the Group continues to pursue technology and operations consolidation and to further cross sell, particularly wealth and insurance products. As a result, we believe The Westpac Group is well positioned for the year ahead.

Significant developments

Merger with St.George Bank Limited

On 1 December 2008, Westpac completed its merger with St.George Bank Limited by way of scheme of arrangement. This merger, originally announced on 13 May 2008, was approved by holders of St.George ordinary shares on 13 November 2008 and subsequently approved by the Federal Court of Australia on 17 November 2008. Under the terms of the merger, holders of St.George ordinary shares received 1.31 Westpac ordinary shares for each St.George ordinary share held on the record date. Based on the closing price of Westpac ordinary shares on the Australian Securities Exchange on 17 November 2008 of A$16.32 per ordinary share and the 742,594,256 Westpac ordinary shares issued to holders of St.George ordinary shares as at the record date, the total value of the Westpac ordinary shares issued to St.George ordinary shareholders was A$12.1 billion. St.George currently operates as a wholly owned Westpac subsidiary, however, it is anticipated that Westpac and St.George will become a

(1)       All data and opinions under ‘Outlook’ are generated by our internal economists and management.

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single Authorised Deposit-taking Institution (ADI) in the first half of the 2010 calendar year. This will involve transferring the assets, liabilities, business and undertaking of St.George to Westpac. St.George Bank Limited will be deregistered as a separate company immediately after the transfer. The move to a single ADI is driven by regulatory requirements and will not affect the continued operation of Westpac and St.George Bank as separate brands.

Global financial crisis, impairments and ongoing regulatory response

In the first half of the 2009 financial year, the severity of the global financial crisis deepened, which created a period of extreme uncertainty that saw the near closure of financial and funding markets followed by the failure of a number of financial institutions globally, and with many of the world’s major economies in recession. This environment had many impacts on the banking system, including a reduction in funding availability and dramatically increased wholesale funding costs, increased market volatility, declining values in asset markets, a weakening of operating conditions and an escalation in company stress and associated impairments.

Impairment charges increased significantly during the 2009 financial year driven initially by the immediate impacts of the global financial crisis and increased further with the subsequent economic slowdown. For additional information on impairments refer to ‘Review of Group Operations — Impairment Charges 2009 v 2008’ in Section 2.

Globally, there has been a rapid and ongoing regulatory response to the global financial crisis.

Government Guarantee Schemes

As an early response to the global financial crisis, with a view to promoting financial system stability in Australia and ensuring the continued flow of credit through the economy, the Australian Government announced that it would guarantee deposits held with eligible Australian ADIs (including Westpac, its foreign branches and St.George Bank) for a three year period from 12 October 2008. The guarantee applies to the first $1 million of ‘protected accounts’ per customer per ADI without charge. The Australian Government also provided a guarantee facility for deposits of amounts over $1 million and for wholesale funding of an eligible ADI, in return for a fee payable by the ADI, provided an eligibility certificate has been issued in respect of the liability. The fee applicable to Westpac and St.George is currently 70 basis points (or 0.70%) of the amount guaranteed per annum. The New Zealand Government implemented similar schemes within that jurisdiction.

Remuneration

In response to the global financial crisis, the Australian Government and regulators are implementing a number of changes that seek to ensure that companies align their remuneration policies with sustainable company performance.

Legislation proposed by the Australian Government, regulating termination payments to directors and key management, is currently being considered by Parliament. The legislation will significantly lower the threshold for requiring shareholder approval of termination payments, to payments exceeding one year’s base salary.

The Australian Productivity Commission has released its draft recommendations for reform of Australia’s executive remuneration regulatory framework with the final recommendations and report expected in December 2009.

In addition, the Australian Prudential Regulation Authority (APRA) will amend its Prudential Standards on governance and remuneration, effective from 1 April 2010, to require that remuneration practices of ADIs, life companies and general insurers, align with and support, long-term financial soundness and prudent risk taking.

Liquidity

In addition, APRA is proposing to enhance the prudential standards for liquidity risk management for ADIs. The proposed changes include:

·         enhancing qualitative requirements, consistent with the ‘Principles for Sound Liquidity Risk Management and Supervision’ issued by the Basel Committee on Banking Supervision in September 2008; and

·         strengthening quantitative requirements to ensure ADIs meet a minimum acceptable level of resilience under normal and stress conditions.

APRA intends to issue final standards and reporting forms in the first half of 2010, although this timetable may be amended as international initiatives in this area evolve. A consultation process is currently being undertaken and details of the proposed liquidity enhancements may change through that process. Until there is greater clarity regarding the new prudential requirements, any impact on Westpac cannot be determined.

Changes to accounting standards

In further response to the global financial crisis, governments, regulators and accounting standard setters are working to revise accounting standards. The objective is to achieve convergence towards a single set of high-quality, global and independent accounting standards. The specific areas that have been targeted include accounting for financial instruments, loan-loss provisioning, off-balance sheet exposures, and the impairment and valuation of financial assets. We expect that there will be a number of new standards issued in calendar year 2010 that may require changes to our current accounting approaches.

Further regulatory developments

The Australian Federal Government has embarked on a program of regulatory reform, which will affect Westpac. This includes:

·         credit law reform;

·         the introduction of an unfair contracts regime in relation to contracts with consumers;

·         margin lending reform;

·         superannuation changes; and

·         the introduction of a new regulatory framework for personal property securities.

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Westpac continues to review these developments and will be amending its systems, processes and operations to align with regulatory changes as they occur.

Operating model review in New Zealand

Until 1 November 2006, Westpac Banking Corporation conducted its operations within New Zealand in a branch structure. On that date, and after extensive consultation with the Reserve Bank of New Zealand (RBNZ), Westpac adopted a dual registration operating model, including a locally incorporated subsidiary, Westpac New Zealand Limited (WNZL), to conduct its retail and business banking activities in New Zealand, and a branch, Westpac Banking Corporation New Zealand Branch (NZ Branch) to conduct its institutional and financial markets activities. The conditions of registration of each of WNZL and NZ Branch are consistent with these operating model arrangements. In 2008, it became apparent that both WNZL and NZ Branch had been non-compliant with certain of their conditions of registration. Consequently, the RBNZ asked Westpac to review the structure of its operating model in New Zealand to ensure that it is able to sustain durable compliance with the RBNZ’s prudential policies. Accordingly, it was agreed that an independent review would take place, with the terms of reference for the review established through consultation between the RBNZ, WNZL and NZ Branch. The review was conducted under the well established processes and framework of section 95 of the Reserve Bank of New Zealand Act 1989. The report from the independent reviewer to the RBNZ was completed on 30 September 2009. The report contained various observations, which are being considered by the Westpac Banking Corporation and WNZL Boards. The independent reviewer made some observations regarding some aspects of WNZL’s compliance with the RBNZ’s outsourcing policy (BS11) which WNZL is currently addressing. Operating model and governance changes that may result from this process will be the subject of future discussions with the RBNZ and will be appropriately disclosed.

Changes to exception fees

On 3 August 2009, Westpac announced that both Westpac and St.George would reduce exception fees on consumer and business accounts and credit cards to $9.00, effective 1 October 2009 following progressive reductions in exception fees over the preceding 18 months. The relevant fees include account overdrawn fees, outward dishonour fees, periodic payments not made, and credit card missed payment and over the limit fees. The reduction in fees is expected to impact The Westpac Group results for the 2010 financial year by reducing revenue and net profit by approximately $300 million and $210 million, respectively.

Litigation

New Zealand Inland Revenue Department

Tax assessments for nine structured finance transactions undertaken between 1998 and 2002 have been the subject of proceedings between Westpac and the Commissioner of Inland Revenue (CIR) New Zealand. The proceedings challenged amended assessments issued by the CIR in respect of Westpac’s tax treatment of these transactions. The High Court in Auckland found in favour of the CIR on four representative transactions. When taking into account all of the nine transactions, the financial cost of the judgment would be NZ$918 million (A$753 million), made up of core tax of NZ$586 million and interest of NZ$332 million. This amount has been fully provided for in our financial statements for the year ended 30 September 2009. Additional information is included in Note 37 to the financial statements.

Capital transactions

As part of implementing the merger with St.George, and in addition to issuing 742,594,256 Westpac ordinary shares to holders of St.George ordinary shares as discussed above under ‘Merger with St.George Bank Limited’, Westpac acquired St.George’s SAINTS securities on 1 December 2008 for $350 million and St.George redeemed its SPS, CPS and CPS II Tier 1 securities on 31 March 2009 for a combined face value of $875 million.

Westpac also undertook a number of significant initiatives to increase its Tier 1 capital during the year ended 30 September 2009.

On 16 December 2008, Westpac issued 156,250,000 fully paid ordinary shares at an issue price of $16.00 each in an underwritten institutional share placement that raised in the aggregate $2.5 billion in capital. These ordinary shares rank equally with existing ordinary shares in Westpac, other than with respect to Westpac’s dividend for the financial year ended 30 September 2008 to which holders of these new ordinary shares were not entitled. In February 2009, Westpac issued $441 million of ordinary shares to shareholders under a share purchase plan.

In administering Westpac’s Dividend Reinvestment Plan, 29,622,866 ordinary shares were issued at a price of $16.13 in respect of Westpac’s 2008 final dividend and 29,135,654 ordinary shares were issued at a price of $18.46 in relation to the 2009 interim dividend.

In addition, Westpac entered into an agreement with J.P. Morgan Australia Limited to underwrite 100% of Westpac’s 2008 final dividend, which resulted in the issue of $887 million of ordinary shares to the underwriter, in addition to the ordinary shares issued to Dividend Reinvestment Plan participants.

Finally, on 31 March 2009, Westpac issued $908 million of new non-innovative residual Tier 1 securities known as Westpac SPS II.

Supervision and regulation

Australia

Within Australia we are subject to supervision and regulation by five principal agencies: the Australian Prudential Regulation Authority (APRA); the Reserve Bank of Australia (RBA); the Australian Securities and Investments Commission (ASIC); the Australian Securities Exchange (ASX); and the Australian Competition and Consumer Commission (ACCC).

APRA is responsible for the prudential supervision of banks, credit unions, building societies, life and general insurance companies, friendly societies and most superannuation (pension) funds. APRA’s roles include the establishment and enforcement of prudential standards and practices designed to ensure that, under all reasonable circumstances, financial promises made by the institutions it supervises are met.

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As an ADI, we report prudential information to APRA including in relation to capital adequacy, large exposures, credit quality and liquidity. Our controlled entities in Australia that are authorised insurers and trustees of superannuation funds are also subject to the regulatory regime of APRA. Reporting is supplemented by consultations, on-site inspections and targeted reviews. Our external auditors also have an obligation to report on compliance with certain statutory and regulatory banking requirements and on any matters that in their opinion may have the potential to materially prejudice the interests of depositors and other stakeholders.

Australia’s risk-based capital adequacy guidelines are generally consistent with the approach agreed upon by the Basel Committee on Banking Supervision. Refer to ‘Capital Resources — Basel Capital Accord’ in Section 2.

The RBA is responsible for monetary policy, maintaining financial system stability and promoting the safety and efficiency of the payments system. The RBA is an active participant in the financial markets, manages Australia’s foreign reserves, issues Australian currency notes and serves as banker to the Australian Government.

ASIC is the national regulator of Australian companies. Its primary responsibility is for regulation and enforcement of company, financial markets and financial services laws that protect consumers, investors and creditors. With respect to financial services, it promotes honesty and fairness through the provision of consumer protection, using as necessary its regulatory powers to enforce laws relating to deposit-taking activities, general insurance, life insurance, superannuation, retirement savings accounts, securities (such as shares, debentures and managed investments) and futures contracts and financial advice. ASIC will become the principal regulator of consumer credit providers in 2010 following the introduction of new national consumer credit regulation.

The ASX operates Australia’s primary national market for securities issued by listed companies. Some of our securities (including our ordinary shares) are listed on the ASX and we therefore have obligations to comply with the ASX Listing Rules that have statutory backing under the Corporations Act. Oversight of listed companies’ compliance with the ASX Listing Rules is currently shared between the ASX and ASIC. The Australian Government has recently announced that ASIC will take over the supervision and surveillance of financial markets and broker participants, effective in the third quarter of 2010 calendar year. Currently this function is performed by ASX Markets Supervision. Individual markets will retain supervision of entities listed upon them.

The ACCC is an independent statutory authority responsible for the regulation and prohibition of anti-competitive and unfair market practices and mergers and acquisitions in Australia. Its objectives are to ensure that corporations do not act in a way that may have the effect of eliminating or reducing competition, and to oversee product safety and liability issues, pricing practices and third party access to facilities of national significance. The ACCC’s role in consumer protection complements that of Australian State and Territory consumer affairs agencies that administer the unfair trading legislation of their jurisdictions.

The Australian Government’s present policy, known as the ‘four pillars policy’, is that there should be no fewer than four major banks to maintain appropriate levels of competition in the banking sector. Under the Financial Sector (Shareholding) Act, the Australian Government’s Treasurer must approve an entity acquiring a stake in a financial sector company of more than 15%.

Proposals for foreign acquisitions of Australian banks are subject to approval by the Australian Government under the Australian Foreign Acquisitions and Takeovers Act 1975.

As discussed above, in response to the global financial crisis, governments are reviewing the regulation and supervision of, in particular, financial institutions which may result in legislative, regulatory, and prudential changes in various jurisdictions, including Australia and New Zealand.

New Zealand

The Reserve Bank of New Zealand (RBNZ) is responsible for the supervision of the New Zealand banking industry. This is primarily achieved through an extensive disclosure regime that requires all banks to publish financial statements on a quarterly basis, which also incorporates director attestation on a bank’s risk management disciplines.

It is a policy of the RBNZ that all systemically important banks must incorporate as a local entity in New Zealand and comply with New Zealand prudential requirements, rather than operate through a branch structure. Until 1 November 2006, we conducted our New Zealand business through a branch (NZ Branch), however, the NZ Branch was deemed to be a systemically important bank and therefore required to incorporate locally.

The RBNZ allows an overseas bank to operate in New Zealand as both a branch of its overseas parent and through a subsidiary.

Accordingly, we established Westpac New Zealand Limited to assume and carry on the New Zealand consumer and business banking operations of our NZ Branch. Westpac New Zealand Limited commenced operating as a registered bank under the Reserve Bank of New Zealand Act 1989 on 1 November 2006. The NZ Branch continues to operate in New Zealand, retaining the New Zealand wholesale and financial markets business.

The reorganisation of our New Zealand business was facilitated by legislation, which was the only means by which our New Zealand consumer and business banking operations could be vested in Westpac New Zealand Limited efficiently, economically and without affecting the continuity of the provision of those banking services. The Westpac New Zealand Act 2006 provided for the vesting of designated NZ Branch assets and liabilities in Westpac New Zealand Limited on 1 November 2006.

In light of the global financial crisis, the RBNZ and other regulators are reviewing prudential regulation, particularly for systematically important banks. The ‘dual registration’ model under which we operate in New Zealand has recently been under review and may be subject to change, as discussed above under ‘Significant developments — Operating model review in New Zealand’.

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The Banking Act 1959 (Australia) gives priority over our Australian assets to Australian depositors. Accordingly, unsecured creditors and depositors of the remaining NZ Branch will rank after our Australian depositors in relation to claims against Westpac Banking Corporation’s Australian assets.

Based on the statement of financial position, as at 30 September 2009, the carrying value of the New Zealand assets of the NZ Branch of Westpac Banking Corporation was greater than its New Zealand deposit liabilities.

United States

Our New York branch is a US federally licensed branch and, as such, is subject to supervision, examination and extensive regulation by the US Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System (the US Federal Reserve) under the US International Banking Act of 1978 (IBA) and related regulations. Under the IBA, we may not open any branch, agency or representative office in the US or acquire more than 5% of the voting stock of any US bank without the prior approval of the US Federal Reserve.

A US federal branch must maintain, with a US Federal Reserve member bank, a capital equivalency deposit as prescribed by the US Comptroller of the Currency in an amount which is the greater of:

·         the amount of capital that would be required of a national bank organised at the same location; or

·         5% of the total liabilities (excluding, among other things, liabilities to affiliates and liabilities of any international banking facilities) of the US federal branch.

In addition, a US federal branch is examined by the US Comptroller of the Currency at least once each calendar year and periodically by the US Federal Reserve. The examination covers risk management, operations, credit and asset quality and compliance with the record-keeping and reporting requirements that apply to national banks, including the maintenance of its accounts and records separate from those of the foreign bank and any additional requirements prescribed by the US Comptroller of the Currency.

A US federal branch of a foreign bank is, by virtue of the IBA, subject to the receivership powers exercisable by the US Comptroller of the Currency.

At this time we have not elected to become, and therefore we are not, a financial holding company as defined in the Gramm-Leach-Bliley Act of 1999.

The Obama Administration has proposed financial regulatory reform legislation that would make significant changes in the existing US regulatory system for banks and other financial institutions. Individual members of the US Congress have also indicated that they intend to propose their own versions of financial regulatory reform legislation in the current session of Congress. It is not possible to predict whether or in what form any such legislation might be enacted. Nor is it possible to predict what effects such legislation, if enacted, would have on a foreign bank such as Westpac that operates a branch in the United States.

Anti-Money Laundering Regulation

Australia

Westpac has a Group-wide program to manage changes required by the Anti-Money Laundering and Counter Terrorism Financing Act 2006, scheduled for introduction in March 2010. We continue to actively consult with the regulator, Australian Transactions Reports and Analysis Centre (AUSTRAC), on those implementation activities. All changes required for identifying new customers have been completed. The remaining work centres on implementing changes to support ongoing monitoring and reporting of suspicious transactions. These changes will be completed in the first half of 2010.

United States

The USA Patriot Act requires US financial institutions, including the US branches of foreign banks, to take certain steps to prevent, detect and report individuals and entities involved in international money laundering and the financing of terrorism. The required actions include verifying the identity of financial institutions, terminating correspondent accounts for foreign ‘shell banks’ and obtaining information about the owners of foreign bank clients and the identity of the foreign bank’s agent for service of process in the US. Many of the new anti-money laundering compliance requirements of the USA Patriot Act are consistent with the anti-money laundering compliance obligations previously imposed on US financial institutions, including the US branches of foreign banks, under the Bank Secrecy Act and under regulations of the applicable US bank regulatory agency such as the US Comptroller of the Currency. These include requirements to adopt and implement an effective anti-money laundering program, report suspicious transactions or activities, and implement due diligence procedures for correspondent and other customer accounts. The USA Patriot Act and other recent events have resulted in heightened scrutiny of Bank Secrecy Act and anti-money laundering compliance programs by US federal bank regulatory and law enforcement authorities.

Outsourcing contracts

Westpac’s significant long-term contracts are summarised in Note 35 to the financial statements.

Legal proceedings

Our entities are defendants from time-to-time in legal proceedings arising from the conduct of our business. We have contingent liabilities in respect of actual and potential claims and proceedings that have not been determined. Material legal proceedings are described in Note 37 to the financial statements. An assessment of likely losses is made on a case-by-case basis for the purposes of the financial statements and specific provisions have been made where appropriate, as described in Note 37 to the financial statements.

Principal office

Our principal office is located at 275 Kent Street, Sydney, New South Wales, 2000, Australia. Our telephone number for calls within Australia is 132 032 and our international telephone number is (+61) 2 9293 9270.

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Corporate Governance

Introduction

This statement describes our corporate governance framework, policies and practices as at 4 November 2009.

Framework and approach

Our approach to corporate governance is based on a set of values and behaviours that underpin day-to-day activities, provide transparency and fair dealing, and protect stakeholder interests.

This approach includes a commitment to excellence in governance standards, which Westpac sees as fundamental to the sustainability of our business and its performance. This includes monitoring local and global developments in corporate governance and their implications for us.

Australia

In Australia, we take into account the revised Corporate Governance Principles and Recommendations (ASXCGC’s Recommendations) published in August 2007 by the ASX Corporate Governance Council (ASXCGC), and the Corporations Act 2001 (Corporations Act). As an ADI, we must also comply with good governance requirements prescribed by the Australian Prudential Regulation Authority (APRA) under Prudential Standard APS 510 Governance.

This statement addresses each of the eight ASXCGC’s Recommendations with an explanation of our corporate governance practices, demonstrating our compliance with each Recommendation. A checklist summarising our compliance is included at the end of this statement.

Further details about the ASXCGC’s Recommendations can be found on the ASX website www.asx.com.au.

New Zealand

Westpac also has ordinary shares quoted on the New Zealand Stock Market (NZSX). As an overseas listed issuer in New Zealand, we are deemed to satisfy and comply with the NZSX Listing Rules, provided that we remain listed on the ASX and comply with the ASX Listing Rules.

The ASX, through the ASXCGC’s Recommendations, and the New Zealand Exchange (NZX) have adopted a similar ‘comply or explain’ general approach to corporate governance. However, the ASXCGC’s Recommendations may materially differ from the corporate governance rules and the principles of the NZX’s Corporate Governance Best Practice Code.

United States

Westpac has American Depositary Shares (ADS) quoted on the New York Stock Exchange (NYSE). Under the NYSE listing rules, foreign private issuers are permitted to follow home country practice in respect of corporate governance in lieu of the NYSE listing rules. However, we are still required to comply with certain audit committee and additional notification requirements.

We are in compliance with all NYSE listing rules applicable to us in all material respects.

Under the NYSE listing rules, foreign private issuers are required to disclose any significant ways in which their corporate governance practices differ from those followed by domestic United States companies. We have compared our corporate governance practices to the corporate governance requirements of the NYSE listing rules and note the significant differences below.

The NYSE listing rules require that, subject to limited exceptions, shareholders be given the opportunity to vote on equity compensation plans and material revisions to those plans.

In Australia there are no laws or stock exchange listing rules that require shareholder approval of equity-based incentive plans (other than for Directors) or individual grants under the plans (other than awards to Directors, including the CEO). However, for equity-based incentive plans introduced since 2006, shareholder approval has been obtained, including for the Westpac Reward Plan, our Restricted Share Plan, and the Chief Executive Officer’s (CEO) equity-based remuneration. Employee equity plans introduced in 2002 that have not been approved by shareholders include the Westpac Performance Plan, the Employee Share Plan, and the Deferral Share Plan.

All of these plans have been disclosed in the Remuneration Report in Section 9 of the Directors’ Report, which is subject to a non-binding shareholder vote at the Annual General Meeting (AGM). The details of all grants under our equity-based incentive plans have been disclosed in Note 26 of our financial statements for the year ended 30 September 2009.

The NYSE listing rules provide that the Nominations Committee’s responsibilities should include selecting, or recommending that the Board select, the Director nominees for the next annual meeting for shareholders.

Our constitution states that at each AGM one-third of our Directors (excluding the CEO and any Director appointed during the year to fill a casual vacancy) and any other Director who has held office for three or more years since their last election, must retire. In 2009, only one of our Directors met this three year threshold. A determination needed to be made regarding which additional two Directors would retire and seek re-election at the 2009 AGM. Westpac considered that it was appropriate for the full Board, rather than the Nominations Committee, to determine the Board candidates for retirement under the rotation policy, and to review and recommend their re-election by shareholders at the 2009 AGM.

Websites

This statement and a range of documents referred to in it are available on our corporate governance website at www.westpac.com.au/corpgov. This website is regularly updated and contains copies and summaries of our charters, principles and policies. These documents are also available to our shareholders in print from our Investor Relations department.

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Focus and events in 2009

·         Merger with St.George Bank Limited successfully completed. Governance, risk and reporting structures have allowed integration to proceed smoothly, and deliver on customer-centric multi-brand strategy despite the complexities associated with a merger of this scale and the challenging external environment arising from the global financial crisis.

·         Managing through the challenging and volatile economic and financial conditions resulting from the global financial crisis. Strong risk and capital management, and a culture of pro actively identifying and acting on emerging issues, have enabled us to continue to support our customers through this difficult period.

·         We have established a Board Technology Committee to have focused, rigorous oversight of information technology within the Group, and approve strategies and their implementation, and related policies. A comprehensive IT strategy for the Group has been developed and approved, and robust governance established to facilitate implementation of the associated program of work.

·         With the release of our first Prudential Market Disclosure Report (Pillar 3 Report) in November 2008, and the following quarterly disclosures, we now provide additional information on our regulatory capital, risk exposures and risk management practices. The Pillar 3 Report release marked the completion of Westpac’s adoption of all elements of the Basel Capital Accord (Basel II) framework.

·         Governance of sustainability performance was enhanced with the formalisation of the Group-wide Sustainability Council. Further, Westpac’s Community Consultative Council, which is chaired by our CEO and has senior representation from key external stakeholder groups, convened a special meeting on financial hardship.

·         Continued top (10.0) rating by GovernanceMetrics International in our 19th consecutive assessment — one of only 43 so rated out of over 4,200 companies assessed.

Governance framework

The Executive Team, Disclosure Committee and Executive Risk Committees sit beneath the CEO and the Board Committees to implement Board-approved strategies, policies and management of risk across the Group.

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Board, committees and oversight of management

Board of Directors

Roles and responsibilities

The Board Charter outlines the roles and responsibilities of the Board. Key responsibilities in summary are:

·         approving the strategic direction of The Westpac Group;

·         evaluating Board performance and determining Board size and composition;

·         appointing and determining the duration, remuneration and other terms of appointment of the CEO and Chief Financial Officer (CFO), and ratifying the appointments of other senior executives;

·         evaluating the performance of the CEO and CFO, and monitoring the performance of other senior executives;

·         Board, CEO and CFO succession planning;

·         approval of the annual budget and financial statements and monitoring performance against the approved budget;

·         determining our dividend policy;

·         determining our capital structure;

·         approving our risk management strategy and frameworks, and monitoring their effectiveness;

·         considering the social, ethical and environmental impact of our activities and monitoring compliance with our sustainability policies and practices;

·         maintaining a constructive and ongoing relationship with the exchanges and regulators, and approving policies regarding disclosure and communications with the market and our shareholders; and

·         internal governance including delegated authorities, policies for appointments to our controlled entity Boards and monitoring resources available to senior executives.

Delegated authority

The constitution and the Board Charter enable the Board to delegate to Committees and management.

The roles and responsibilities delegated to the Board Committees are captured in the Charters of each of the six established Committees, namely:

·         Audit;

·         Risk Management;

·         Nominations;

·         Remuneration;

·         Sustainability; and

·         Technology.

The Board establishes other Committees from time to time to consider matters of special importance or to exercise specific delegated authority from the Board.

The Board has also delegated to the CEO, and through the CEO to other executives, responsibility for the day-to-day management of our business. The scope of, and limitations to, management delegated authority is clearly documented and covers areas such as operating and capital expenditure, funding and securitisation, and lending. The Delegated Authority Policy Framework outlines principles to govern decision-making within the Group including appropriate escalation and reporting to the Board. These delegations balance effective oversight with appropriate empowerment and accountability of management.

Independence

Together, the Board members have a broad range of relevant financial and other skills and knowledge combined with the extensive experience necessary to guide our business. Details are set out in Section 1 of the 2009 Directors’ Report.

All of our Non-executive Directors satisfy our criteria for independence, which are consistent with those applied by the NYSE.

The Board assesses the independence of our Directors on appointment and annually. Each Director provides an annual attestation of his or her interests and independence.

Directors are considered independent if they are independent of management and free from any business or other relationship that could materially interfere with, or reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgment. Materiality is assessed on a case-by-case basis by reference to each Director’s individual circumstances rather than by applying general materiality thresholds. The assessment has regard to the criteria applied by the NYSE and SEC.

Each Director is expected to disclose any business or other relationship which he or she has directly or as a partner, shareholder or officer of a company or other entity that has an interest, or a business or other relationship, with Westpac or a related entity. The Board considers information about any such interests or relationships, including any related financial or other details, when it assesses the Director’s independence.

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Size and membership of Board Committees as at 30 September 2009

The charts below demonstrate that our Board comprises a majority of independent Directors and the tenure of our current Directors.

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The Chairman

The Board elects one of the independent Non-executive Directors as Chairman. Our Chairman is Ted Evans. The Chairman’s role includes:

·         providing effective leadership to the Board in relation to all Board matters;

·         representing the views of the Board to the public;

·         convening regular Board meetings throughout the year, and ensuring that minutes of meetings accurately record decisions taken and, where appropriate, the views of individual Directors;

·         guiding the agenda and conduct of all Board meetings;

·         reviewing the performance of Non-executive Directors;

·         overseeing Non-executive Director and CEO succession; and

·         promoting constructive and respectful relations between the Board and management.

The Deputy Chairman

Our Deputy Chairman is John Curtis. The Deputy Chairman’s role includes:

·         chairing Board, Board Nominations Committee and shareholder meetings when the Chairman is unable to do so; and

·         undertaking additional matters on the Chairman’s behalf as requested by the Chairman.

CEO

Our CEO is Gail Kelly. The CEO’s role includes:

·         effective leadership of the management team;

·         the development of strategic objectives for the business; and

·         the day-to-day management of the Group’s operations.

Board meetings

The Board has 11 scheduled meetings each year, with additional meetings held as required. In July each year the Board discusses our strategic plan and approves our overall strategic direction. The Board also conducts a half year review of our strategy. The Board also conducts workshops on specific subjects throughout the year. Board meetings are characterised by robust exchanges of views, with Directors bringing their experience and independent judgment to bear on the issues and decisions at hand.

Non-executive Directors regularly meet without management present, so that they can discuss issues appropriate to such a forum. In all other respects, senior executives are invited to participate in Board Meetings. They also are available to be contacted by Directors between meetings.

Meetings attended by Directors for the 2009 financial year are reported in Section 8 of the 2009 Directors’ report.

Nomination and appointment

The Board Nominations Committee is responsible for:

·         developing and reviewing policies on Board composition, strategic function and size;

·         annually evaluating performance and effectiveness of the Board, its Committees and individual Directors;

·         succession planning for the Non-executive Directors;

·         developing and implementing induction programs for new Directors and ongoing education for existing Directors;

·         developing eligibility criteria for the appointment of Directors;

·         recommending appointment of Directors to the Board;

·         considering and recommending candidates for appointment to the Boards of relevant subsidiaries; and

·         reviewing our corporate governance policies having regard to international corporate governance standards.

The Board Nominations Committee assesses nominations of new Directors against a range of criteria including the candidate’s background, experience, professional skills, personal qualities, whether their skills and experience will complement the existing Board and their availability to commit themselves to the Board’s activities. External consultants are used to access a wide base of potential Directors.

New Directors receive a letter of appointment, which sets out the expectations of the role, conditions of appointment including expected term of appointment, and remuneration. This letter conforms to the ASXCGC’s Recommendations.

Term of office

The Board may appoint a new Director, either to fill a casual vacancy or as an addition to the existing Directors, provided the total number of Directors does not exceed 15 Non-executive Directors and three Executive Directors. Except for the Managing Director, a Director appointed by the Board holds office only until the close of the next AGM but is eligible for election by shareholders at that meeting.

Our constitution states that, at each AGM, one-third of our Directors, and any other Director who has held office for three or more years since their last election, must retire. In determining the number of Directors to retire, no account is to be taken of Directors holding casual vacancy positions or of the CEO. The Directors to retire by rotation are those who have been the longest in office. A retiring Director holds office until the conclusion of the meeting at which he or she retires but is eligible for re-election by shareholders at that meeting.

The Board makes recommendations concerning the election or re-election of any Director by shareholders. In considering whether to support a candidate, the Board takes into account the results of the Board performance evaluation conducted during the year. In addition to the relevant information on the candidates provided to shareholders in the Notice of Meeting, the candidates are invited to give a short presentation at the AGM.

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The Board has a Tenure Policy, which limits the number of terms of office that any Non-executive Director other than the Chairman may serve to the longer of three consecutive terms or nine years. The maximum tenure for the Chairman is the longer of four terms or twelve years (inclusive of any term as a Director prior to being elected as Chairman), from the date of first election by shareholders.

Education

On appointment, all Directors are offered an induction program appropriate to their experience to familiarise them with our business, strategy and any current issues before the Board. The induction program includes meetings with the Chairman, the CEO, the Board Committee Chairs, each Group Executive and the Chief Strategy Officer.

The Board encourages Directors to continue their education by participating in workshops held throughout the year, attending relevant site visits and undertaking relevant external education.

Access to information and advice

All Directors have unrestricted access to company records and information, and receive regular detailed financial and operational reports from executive management. Each Director also enters into an access and indemnity agreement which, amongst other things, provides for access to documents up to seven years after his or her retirement as a Director.

The Chairman and other Non-executive Directors regularly consult with the CEO, CFO, and other senior executives and may consult with, and request additional information from, any of our employees.

All Directors have access to advice from the Group Executive, Counsel and Secretariat.

In addition the Board collectively, and all Directors individually, have the right to seek independent professional advice, at our expense, to help them carry out their responsibilities. While the Chairman’s prior approval is needed, it may not be unreasonably withheld.

Company secretaries

The Board is responsible for the appointment of our two Company Secretaries. The Group Executive, Counsel and Secretariat attends Board and Committee meetings and is responsible for providing Directors with advice on legal and corporate governance issues. The Head of Group Secretariat is responsible for the operation of the secretariat function, including implementing our governance framework and, in conjunction with management, giving practical effect to the Board’s decisions.

Profiles of our Company Secretaries are set out in Section 1 of the 2009 Directors’ report.

Committees

Composition and independence

Committee members are chosen for the skills and experience they can contribute to the respective Committees. All of the Committees comprise independent Non-executive Directors. The CEO is also a member of the Board Sustainability and Board Technology Committees.

Operation and reporting

Scheduled meetings of the Board Committees occur quarterly, with the exception of the Board Sustainability and Board Technology Committees which have scheduled meetings three times a year. All Committees are able to meet more frequently as necessary. Each Committee is entitled to the resources and information it requires and has direct access to our employees and advisers. The CEO attends all Committee meetings, except where she has a material personal interest in a matter being considered. Senior executives and other selected employees are invited to attend Committee meetings as required. All Directors receive all Committee papers and can attend any Committee meeting, provided there is no conflict of interest.

Performance

Board, Committees and Directors

The Board undertakes ongoing self-assessment as well as commissioning an annual performance review by an independent consultant.

The performance review process conducted in 2009 included interviews with Directors and a number of senior executives. The review was wide-ranging, with outputs collected and analysed and presented to the Board. The Chairman also discussed the results with individual Directors and Committee Chairs.

The full Board (excluding the Chairman) reviewed the results of the performance review of the Chairman. These results were then privately discussed between the Chairman and Deputy Chairman.

Management

The Board, in conjunction with its Board Remuneration Committee, is responsible for approving the performance objectives and measures for the CEO and other senior executives and providing input into the evaluation of performance against these objectives. The Board Risk Management Committee also refers to the Board Remuneration Committee any matters that come to its attention that are relevant with respect to remuneration policy or practices.

The management performance evaluations for the 2008 financial year were conducted in November 2008. Management performance evaluations for the 2009 financial year will be conducted at the end of the 2009 calendar year.

There is a further discussion on performance in the Remuneration Report in the 2009 Directors’ report.

All new senior executives are provided with extensive briefing on our strategies and operations, and the respective roles and responsibilities of the Board and senior management.

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Ethical and responsible decision-making

Code of Conduct and Principles for Doing Business

Our ‘Code of Conduct’ sets out seven values that we believe will maintain the trust and confidence placed in us by our customers, shareholders, suppliers and the community at large. We recognise that this trust can only be retained by acting ethically and responsibly in all our dealings and by seeking to continually improve in all that we do. The Code of Conduct applies to all of our employees and contractors and is supported by the Board. The seven values are that:

·         we act with honesty and integrity;

·         we respect the law and act accordingly;

·         we respect confidentiality and do not misuse information;

·         we value and maintain our professionalism;

·         we work as a team;

·         we manage conflicts of interest responsibly; and

·         we strive to be a good corporate citizen and achieve community respect.

Our ‘Principles for Doing Business’ (the Principles) set out how we aim to conduct ourselves across our business in the areas of:

·         governance and ethical practices;

·         employees;

·         customers;

·         environment;

·         community; and

·         suppliers.

The Principles are also aligned with significant global initiatives that promote responsible business practices. Our Principles apply to all Directors and employees. We report our performance against them annually.

We also have a range of internal guidelines, communications and training processes and tools, including an online learning module entitled ‘Doing the Right Thing’, which apply to and support our Code of Conduct and Principles.

In addition to our Code of Conduct and Principles, we have a number of key policies to manage our compliance and human resource requirements. We also voluntarily subscribe to a range of external industry codes, such as the Code of Banking Practice and the Electronic Funds Transfer Code of Conduct.

Code of Ethics for Senior Finance Officers

The Code of Accounting Practice and Financial Reporting (the Code) complements our Code of Conduct. The Code is designed to assist the CEO, CFO and other principal financial officers in applying the highest ethical standards to the performance of their duties and responsibilities with respect to accounting practice and financial reporting. The Code requires that those officers:

·         act honestly and ethically, particularly with respect to conflicts of interest;

·         provide full, fair, accurate and timely disclosure in reporting and other communications;

·         comply with applicable laws, rules and regulations;

·         promptly report violations of the Code; and

·         be accountable for adherence to the Code.

Conflicts of interest

Westpac has a conflicts of interest framework, which includes a Group policy supported by more specific policies and guidelines aimed at recognising and managing potential conflicts.

The Board

All Directors are required to disclose any actual or potential conflict of interest upon appointment and are required to keep these disclosures to the Board up to date.

Any Director with a material personal interest in a matter being considered by the Board must declare their interest and, unless the Board resolves otherwise, may not be present during boardroom discussions or vote on the relevant matter.

Our employees

Our employees are not permitted to participate in activities that involve a conflict with their duties and responsibilities or which are prejudicial to our business. We expect our employees to:

·         avoid conflicts of interest;

·         obtain consent from senior management before accepting a directorship on the board of a non-Westpac Group company;

·         disclose any material interests they have with our customers or suppliers to their manager and not be involved with customer relationships where they have such an interest;

·         not participate in business activities outside their employment with us (whether as a principal, partner, director, agent, guarantor, investor or employee) without approval or when it could adversely affect their ability to carry out their duties and responsibilities; and

·         not solicit, accept or offer money, gifts, favours or entertainment which might influence, or might appear to influence, their business judgment.

Fit and Proper Person Assessments

Our Fit and Proper Policy complies with the related APRA Prudential Standards and ASIC Guidelines. In accordance with that policy, we assess the fitness and propriety of our Directors and also of employees who perform specified roles. The Board Nominations Committee and the Board are responsible for assessing the main Board Directors and Non-executive Directors on subsidiary Boards. The Chairman has delegated authority from the Board to make fit and proper assessments for senior executives. An executive Fit and Proper Committee assesses other employees. In all cases the individual is asked to provide a detailed declaration and background checks are undertaken. Assessments are performed upon appointment to the relevant position and are re-assessed annually.

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Concern reporting and whistleblowing

Under our Whistleblower Protection Policy, our employees are encouraged to raise any concerns of activities or behaviour that may be unlawful or unethical with either management, the human resources team (People), the compliance team or the Fraud and AML Control business unit. Concerns may include suspected breaches of the Code of Conduct, the Principles and any internal policy or regulatory requirement.

Employees can also raise these concerns on an anonymous basis through either of our internal or external whistleblower reporting mechanisms; logging their report onto an internal reporting system (Concern Online); or by telephone or email to an external and independent professional services firm with employees who are trained in confidential reporting and whistleblower protection (Employee Concern Hotline).

Employees may also choose to involve the Whistleblower Protection Officer, who is responsible for protecting the employee against disadvantage.

We investigate concerns raised in a manner that is fair, objective and affords natural justice to all people involved. If the investigation shows that wrongdoing has occurred, we are committed to changing our processes and taking action in relation to employees who have behaved incorrectly. Where illegal conduct has occurred, this may involve reporting the matter to relevant authorities.

The concern reporting system meets all relevant Australian and New Zealand legislative requirements, including the Australian Standard AS8004 (Whistleblower Protection Programs for Entities), in addition to our obligations under the United States Sarbanes-Oxley Act of 2002. The system is monitored and reviewed annually and statistics about concerns raised are reported quarterly to both the Board Risk Management Committee and the Westpac Group Operational Risk & Compliance Committee.

Securities trading

Westpac Directors and all Westpac employees are restricted from dealing in our shares and other financial products if they are in possession of inside information. They are also prohibited from passing on inside information to others who may use that information to trade in securities. In addition, Directors and any employees who, because of their seniority or the nature of their position, may have access to material non-public information about Westpac (Prescribed Employees), are subject to further restrictions including only trading in permitted windows following annual and half year profit announcements.

The mechanisms we use to manage and monitor our obligations include:

·         the insider trading provisions of our policy, which prohibits any dealing in any securities where a Director or employee has access to inside information that may affect the price of those securities;

·         the new issues provisions of our policy, which places limitations upon Directors and employees participating in a new product issue where their position puts them in a real or perceived position of conflict of interest;

·         restrictions limiting the periods in which the Directors and Prescribed Employees can trade in our shares or other company securities (Trading Windows);

·         requiring Directors and Prescribed Employees to notify their intention to trade during those Trading Windows and confirm that they have no inside information;

·         monitoring the trading of Westpac securities by Directors and Prescribed Employees;

·         maintaining a register of Prescribed Employees, which is regularly updated;

·         trades by Directors of Westpac securities are notified to ASX within five business days as required under the ASX Listing Rules; and

·         employees are forbidden to enter into hedging arrangements in relation to their unvested employee shares or securities, whether directly or indirectly.

Corporate responsibility and sustainability

We view sustainable and responsible business practices as important for our business and to add shareholder value. This means conducting our business in a responsible, trustworthy and ethical manner, while accepting accountability for our impacts on society and the environment.

We are committed to transparency and fair dealing, treating employees and customers responsibly and having solid links with the community.

Reporting

We report on our social, ethical and environmental performance as a part of the Annual Review with additional detailed information available on our website. Where appropriate, we include what we believe are the most material environmental, social and governance metrics within our financial results announcements.

Our reporting and our management of sustainability aims to address the issues that we believe are the most material for our business and stakeholders. These issues are reflected in our business strategies and specific sustainability priorities.

We follow the widely accepted reporting framework, the Global Reporting Initiative.

The sustainability content of the Annual Review and the additional reporting on our website is also independently assured against the AA1000 Assurance Standard. This goes beyond testing the integrity of the data, to testing the effectiveness of our underlying systems and processes, and the extent to which corporate responsibility and sustainability policies and processes are embedded across our organisation.

In addition, we actively participate in various independent external assessments by authoritative sustainability and governance rating organisations benchmarking us against the highest standards of governance.

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Board Sustainability Committee

The Board Sustainability Committee oversees and provides guidance regarding our commitment to operate our business ethically, responsibly and sustainably, consistent with evolving community expectations.

The Board Sustainability Committee:

·         reviews the social, environmental and ethical impacts of our policies and practices;

·         oversees initiatives to enhance our sustainability;

·         agrees standards for our corporate responsibility and sustainability policies and practices and monitors compliance with these policies and practices;

·         reviews sustainability strategies, objectives and performance;

·         monitors and oversees our environmental, social, governance and other material business risks (along with the BRMC) including the strategic and operational response to climate change; and

·         reviews and approves the independent assurance of our annual sustainability reporting.

Financial reporting

Approach to financial reporting

Our approach to financial reporting reflects three core principles:

·         that our financial reports present a true and fair view;

·         that our accounting methods are comprehensive and relevant and comply with applicable accounting rules and policies; and

·         that our external auditor is independent and serves security holder interests.

The Board monitors Australian and international developments relevant to these principles and reviews our practices accordingly.

The Board delegates oversight responsibility for risk management between the Board Audit Committee and the Board Risk Management Committee.

Board Audit Committee

The Board Audit Committee oversees all matters concerning:

·         the integrity of the financial statements and financial reporting systems;

·         the external auditor’s qualifications, performance, independence and fees;

·         oversight and performance of the internal audit function;

·         compliance with financial reporting and related regulatory requirements (in conjunction with the Board Risk Management Committee, this includes an oversight of APRA statutory reporting requirements); and

·         procedures for the receipt, retention and treatment of financial complaints, including accounting, internal accounting controls or auditing matters and the confidential reporting by employees of concerns regarding accounting or auditing matters.

The Board Audit Committee reviews and assesses:

·         any significant estimates and judgments in financial reports, and monitors the methods used to account for unusual transactions;

·         the processes used to monitor and comply with laws, regulations and other requirements relating to external reporting of financial and non-financial information;

·         the major financial risk exposures; and

·         the process surrounding the disclosures made by the CEO and CFO in connection with their personal certifications of the half year and annual financial statements.

The Board Audit Committee conducts regular discussions with:

·         the Board Risk Management Committee, CFO, Chief Risk Officer (CRO), Group Assurance, management and the external auditor about our major financial risk exposures and the steps management has taken to monitor and control such exposures;

·         the external auditor concerning their audit and any significant findings, and the adequacy of management’s responses;

·         management and the external auditor concerning the half year and annual financial statements;

·         management and the external auditor regarding any correspondence, with regulators or government agencies, and reports that raise issues of a material nature; and

·         the Group Executive, Counsel and Secretariat regarding any legal matters that may have a material impact on the financial statements and/or our compliance with financial reporting and related regulatory policies.

The Board Audit Committee meets with the external auditor without management being present at each meeting. Periodically the Board Audit Committee meets with the General Manager of Group Assurance (our internal audit function) without management.

Financial knowledge

The Board Audit Committee comprises nine independent, Non-executive Directors.

All of the Board Audit Committee members have appropriate financial experience, an understanding of the financial services industry and satisfy the independence requirements under the ASXCGC’s Recommendations, the United States Securities Exchange Act of 1934 (as amended) and its related rules, and the rules of the NYSE.

The Board has determined that Lindsay Maxsted, Chair of the Board Audit Committee, is an ‘audit committee financial expert’ and independent in accordance with US securities law.

The designation of Mr Maxsted as an audit committee financial expert does not impose duties, obligations or

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liability on Mr Maxsted that are greater than those imposed on him as a Board Audit Committee member, nor does it affect the duties, obligations or liability of any other Board Audit Committee member or Board member. Audit committee financial experts are not deemed as an ‘expert’ for any other purpose.

The Board Audit Committee’s membership is set out in the table entitled ‘Size and membership of Board Committees as at 30 September 2009’. The full qualifications of the Audit Committee members and their attendance at Board Audit Committee meetings are set out in Sections 1 and 8 of the 2009 Directors’ report.

External auditor

The role of the external auditor is to provide an independent opinion that our financial reports are true and fair, and comply with applicable regulations.

Our external auditor is PricewaterhouseCoopers (PwC), appointed by shareholders at the 2002 AGM. Our present PwC lead audit partner is Ian Hammond and the review audit partner is Rob Ward. Mr Hammond and Mr Ward assumed responsibility for these roles in 2008 and 2009, respectively.

The external auditor receives all Board Audit Committee papers, attends all Board Audit Committee meetings and is available to Board Audit Committee members at any time. The external auditor also attends the AGM to answer questions from shareholders regarding the conduct of PwC’s audit, the audit report and financial statements and PwC’s independence.

As our external auditor, PwC is required to confirm their independence and compliance with specified independence standards on a quarterly basis.

The roles of lead audit partner and review audit partner must be rotated every five years and cannot be resumed by the same person for a minimum of five years.

We strictly govern our relationship with the external auditor, including restrictions on employment, business relationships, financial interests and use of our financial products by the external auditor.

Engagement of the external auditor

To avoid possible independence or conflict issues, the external auditor is not permitted to carry out certain types of non-audit services for Westpac and may be limited as to the extent to which it can perform other non-audit services as specified in our ‘Pre-approval of engagement of PwC for audit and non-audit services’ (the Guidelines). Use of the external audit firm for any non-audit services must be assessed and approved in accordance with the pre-approval process determined by the Board Audit Committee and set out in the Guidelines.

The breakdown of the aggregate fees billed by the external auditor in respect of each of the two most recent financial years for audit, audit-related, tax and other services is provided in Note 34 to our financial statements for the year ended 30 September 2009. A declaration regarding the Board’s satisfaction that the provision of non-audit services by PwC is compatible with the general standards of auditor independence is provided in Section 10 of the 2009 Directors’ report.

Group Assurance (internal audit)

Group Assurance includes an independent and objective internal audit review function charged with evaluating, testing and reporting on the adequacy and effectiveness of management’s control of operational risk. Group Assurance has access to all of our entities, and conducts audits and reviews following a risk-based planning approach.

Group Assurance provides regular reports to both the Board Audit Committee and the Board Risk Management Committee, and raises any significant issues with the Board Audit Committee. The General Manager Group Assurance has a reporting line to the Chairman of the Board Audit Committee.

Market disclosure

We maintain a level of disclosure that provides all investors with equal, timely, balanced and meaningful information. Consistent with these standards the Board approved our Market Disclosure Policy, which governs how we communicate with our shareholders and the investment community.

The policy reflects the requirements of the ASX, NZX and other offshore stock exchanges where we have disclosure obligations, as well as relevant securities and corporations legislation. Under our policy, information that a reasonable person would expect to have a material effect on the price or value of our securities must be disclosed unless an exception applies under regulatory requirements.

Our Disclosure Committee is responsible for determining what information should be disclosed publicly under the policy, and for assisting employees in understanding what information may require disclosure to the market on the basis that it is price sensitive. The Disclosure Committee is comprised of the CEO, senior executives, and the General Manager Corporate Affairs and Sustainability.

The Group Executive, Counsel and Secretariat is the Disclosure Officer. The Disclosure Officer is ultimately responsible for all communication with relevant stock exchanges and notifying regulators in any jurisdiction as a result of market disclosure.

To supplement the information already available to investors we publish investor discussion packs, containing presentations on and explanations about our financial results, on our website. We also publish on our website our Annual Reviews, Annual Reports, profit announcements, CEO and executive briefings (including webcasts), economic updates, notices of meetings, media releases and briefing transcripts.

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Shareholder communication and participation

We employ a wide range of approaches to communication with our shareholders. These are regularly reviewed to improve our communications, including using new technologies. These approaches include direct communications with shareholders, the publication of all relevant company information in the Investor Centre section of our website, and access to all major market briefings and shareholder meetings via webcasting facilities. Shareholders are given the option to receive information in print or electronic format. One of our most important communications is our Shareholder Newsletter, which is sent to all of our shareholders with the interim and annual dividend notices. The Newsletter provides information on our performance and developments, details on accessing further information and contact numbers for both the Investor Relations Unit and the Share Registry.

We regard the AGM as an important opportunity for engaging and communicating with shareholders. Shareholders are encouraged to attend and actively participate in our AGM, the proceedings of which are webcast and can also be viewed on demand at a later time from our website. An information meeting is linked directly to the AGM for shareholders to participate and ask questions when the AGM is held outside Sydney.

At the time of receipt of the Notice of Meeting, shareholders are invited to put forward questions that they would like addressed at the AGM.

Risk management

Roles and responsibilities

The Board is responsible for reviewing and approving our overall risk management strategy, including determining our appetite for risk. The Board has delegated to the Board Risk Management Committee responsibility for setting risk appetite, approving frameworks, policies and processes for managing risk, and determining whether to accept risks beyond management’s approval discretion.

The Board Risk Management Committee monitors the alignment of our risk profile with our risk appetite, which is defined in the Board Risk Appetite Statement, and with our current and future capital requirements. The Board Risk Management Committee receives regular reports from management on the effectiveness of our management of Westpac’s material business risks. More detail about the role of the Board Risk Management Committee is set out later in this section under ‘Board Risk Management Committee’.

The CEO and executive management team are responsible for implementing our risk management strategy and frameworks, and for developing policies, controls, processes and procedures for identifying and managing risk in all of Westpac’s activities.

Our Group Risk function is independent from the business divisions and reports to the Chief Risk Officer.

Our business model recognises that the responsibility for managing risks in our business lies with the various divisions. This responsibility includes developing division-specific policies, controls, procedures, and monitoring and reporting capability, which align to the frameworks approved by the Board Risk Management Committee.

Our Group Assurance function independently evaluates the adequacy and effectiveness of management controls for risk.

Our overall risk management governance structure is set out in the table of the same name in this section of the statement.

Risk management approach

We regard managing the risks that affect our business as a fundamental activity, as they influence our performance, reputation and future success. Effective risk management involves taking an integrated and balanced approach to risk and reward, and assists us in achieving our objectives of mitigating potential loss or damage and optimising financial growth opportunities. Mitigation and optimisation strategies are of equal importance and need to be effectively aligned and integrated.

We distinguish four main types of risk:

·         credit risk — the risk of financial loss where a customer or counterparty fails to meet their financial obligations;

·         market risk — the risk to earnings from changes in market factors, such as foreign exchange rates, interest rates, commodity prices and equity prices. This includes interest rate risk in the banking book (IRRBB)  — the risk to interest income from a mismatch between the duration of assets and liabilities that arises in the normal course of business activities;

·         liquidity risk — the risk that we will be unable to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses; and

·         operational risk — the risk that arises from inadequate or failed internal processes, people and systems or from external events. This includes compliance risk, the risk of legal or regulatory sanction, financial or reputation loss arising from our failure to apply the regulatory standards expected of us as a financial services group.

In addition to, and linked to, these four main types of risk, we also manage the following risks:

·         equity risk — the potential for financial loss arising from movements in the value of our direct and indirect equity investments;

·         insurance risk — the risk of not being able to meet insurance claims (related to insurance subsidiaries);

·         model risk — the risk of financial, reputation or operational losses arising because of a model;

·         reputation risk — the risk to earnings or capital arising from negative public opinion resulting from the loss of reputation or public trust and standing. This risk encompasses social, ethical and environmental risks arising out of areas such as people management, climate change, governance and supply chain management;

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·         business risk — the risk associated with the vulnerability of a line of business to changes in the business environment; and

·         contagion risk — the risk that problems arising in other Westpac Group members compromise the financial and operational position of the authorised deposit-taking institutions in The Westpac Group.

In December 2007 Westpac received advanced accreditation from the APRA and the Reserve Bank of New Zealand under the Basel II capital framework. This allows us to use the most Advanced Internal Ratings Based (AIRB) approach for credit risk and the Advanced Measurement Approach (AMA) for operational risk to determine our regulatory capital position. We received accreditation for interest rate risk in the banking book capital calculation in July 2008, in accordance with APRA’s implementation timetable.

Board Risk Management Committee

The Board Risk Management Committee:

·         sets risk appetite;

·         reviews and approves the frameworks for managing risk, including credit, market & liquidity, and operational risk;

·         reviews and approves the limits and conditions that apply to the taking of risk, including the authority delegated by the Board to the CEO, CFO and CRO;

·         monitors the risk profile, performance, capital levels, exposures against limits and the management and control of our risks;

·         monitors changes anticipated in the economic and business environment and other factors considered relevant to our risk profile;

·         oversees the development and ongoing review of appropriate policies that support our frameworks for managing risk;

·         reviews any significant issues that may be raised by internal audit as well as the length of time and action taken to resolve such issues; and

·         may approve accepting risks beyond management’s approval discretion.

From the perspective of specific types of risk, the Board Risk Management Committee role includes:

·         credit risk - approving key policies and limits supporting the credit risk management framework; and monitoring the risk profile, performance and management of our credit portfolio;

·         market and liquidity risk — approving key policies and limits supporting the market and liquidity risk management framework including the Value at Risk and Net Interest Income at Risk limits, and our funding strategy and liquidity requirements; and monitoring the market and liquidity risk profile; and

·         operational risk — monitoring the operational risk profile, the performance of operational risk management and controls, and the development and ongoing review of operational risk policies; reviewing compliance risk processes and our compliance with applicable laws, regulations and regulatory requirements; discussing with management and the external auditor any material correspondence with regulators or government agencies and any published reports that raise material issues; and reviewing complaints and whistleblower concerns.

The Board Risk Management Committee also:

·         provides relevant periodic assurances to and refers any relevant matters to the Board Audit Committee; and

·         refers to the Board Remuneration Committee any matters that come to its attention that are relevant with respect to remuneration policy or practices.

Managing compliance risk

Westpac’s Operational Risk Management Framework incorporates our Managing Compliance Risk Policy and reflects the following core principles and practices:

·         compliance is about our responsibilities as employees, our culture, and the systems and processes we use every day;

·         complying with both the letter and spirit of regulatory standards is an essential part of our core values and is critical to our success as a leading Australian financial services organisation;

·         ensuring that the letter and spirit of regulatory standards are embedded into how we do business, how we conduct ourselves, how our systems and processes are designed and how they operate;

·         compliance with regulatory standards is the responsibility of everyone in every part of Westpac. Visibility and accountability of senior management encourages a strong compliance culture;

·         the role of the compliance function is to guide the organisation in embedding compliance into how we do business; and

·         actively engaging with regulatory bodies and industry forums to maintain high standards across the industry.

Key components of the framework established to support these principles include:

·         environment — Board and management oversight and accountability, culture and independent review;

·         identification — identifying obligations, developing and maintaining compliance plans and implementing change;

·         controls — policies, processes, procedures, communication, training and documentation; and

·         monitoring and reporting — monitoring, incident and breach escalation, reporting, issue management and managing regulatory relationships.

As with other forms of risk, business line management is primarily responsible for managing compliance risk and within each major business area there is a dedicated operational risk and compliance function.

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Our Compliance function provides the following support:

·         infrastructure to facilitate compliance planning and reporting;

·         specialist advice to divisions in implementing regulatory initiatives and policies, and establishing compliance programs;

·         analytical tools and advice for independent oversight of areas of strategic compliance risk; and

·         reports on potential weaknesses across the enterprise.

We measure the effectiveness of our compliance program by the mechanisms set out in the Operational Risk Management Framework, including audit, file reviews, mystery shopping, customer surveys and operational risk assessments.

Regular reports are provided by our Compliance function to the Board Risk Management Committee on the status of compliance across the company.

CEO and CFO assurance

The Board receives regular reports from management about our financial condition and operational results, as well as that of our controlled entities. The CEO and the CFO annually provide formal statements to the Board, and have done so for the year ended 30 September 2009, that state in all material respects:

·         Westpac’s financial records for the financial year and half year have been properly maintained in that they:

·         correctly record and explain its transactions, and financial position and performance;

·         enable true and fair financial statements to be prepared and audited; and

·         are retained for seven years after the transactions covered by the records are completed;

·         the financial statements and notes required by the accounting standards for the financial year comply with the accounting standards;

·         the financial statements and notes for the financial year give a true and fair view of Westpac’s and its consolidated entities’ financial position and of their performance;

·         any other matters that are prescribed by the Corporations Act and regulations as they relate to the financial statements and notes for the financial year are satisfied; and

·         the declarations provided in accordance with section 295A of the Corporations Act are founded on a sound system of risk management and internal control, and that the system is operating effectively in all material respects in relation to financial reporting risks.

Remuneration

The Board Remuneration Committee assists the Board by reviewing and approving our remuneration policies and practices. The Board Remuneration Committee’s consideration of reward structures is based on fairness, business performance, legal obligations and high standards of corporate governance.

The Board Remuneration Committee:

·         reviews and approves executive remuneration policy;

·         reviews and makes recommendations to the Board on corporate goals and objectives relevant to the remuneration of the CEO and performance of the CEO in light of these objectives;

·         makes recommendations to the Board on the remuneration of the CEO;

·         makes recommendations to the Board on the remuneration of Non-executive Directors (the company and subsidiary Boards), taking into account the shareholder-approved fee pool;

·         approves contracts and remuneration packages for positions reporting directly to the CEO;

·         reviews and makes recommendations to the Board on equity-based plans;

·         oversees succession planning for senior executives;

·         approves all merit recognition expenditure; and

·         oversees general remuneration practices across the Group.

The Board Remuneration Committee also reviews and makes recommendations to the Board about the recruitment, retention, termination, and succession planning policies and procedures for the CEO and senior positions reporting directly to the CEO. In addition, the Board Remuneration Committee considers and evaluates the performance of senior executives when making remuneration determinations and otherwise as required. This process was undertaken during the reporting year.

Independent remuneration consultants are engaged by the Board Remuneration Committee to ensure that our reward practices and levels are consistent with market practice.

Further details of our remuneration framework are included in the Remuneration Report in Section 9 of the Directors’ report.

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Risk Management Governance Structure

Westpac’s risk management governance structure is set out in the table below:

Board

·         reviews and approves our overall risk management strategy.

Board Risk Management Committee (BRMC)

·         sets risk appetite;

·         approves frameworks and key policies for managing risk;

·         monitors our risk profile, performance, capital levels, exposures against limits and management and control of our risks;

·         monitors changes anticipated in the economic and business environment and other factors relevant to our risk profile;

·         oversees the development and ongoing review of appropriate policies that support our frameworks for managing risk;

·         reviews any significant issues raised by internal audit, as well as the length of time and action taken to resolve such issues; and

·         determines whether to accept risks beyond the approval discretion provided to management.

Executive management forum focused on global economic and market-related events

·         proactively tracks and responds to emerging trends;

·         seeks and harnesses opportunities to re-enter capital markets and proactively addresses issues relating to balance sheet management and funding; and

·         maintains intensity of effort on risk management in the current environment.

Divisional risk management

Group risk

·         develops the Group-level risk management frameworks for approval by the BRMC;

·         directs the review and development of key policies supporting the risk management frameworks;

·         establishes risk concentration limits and monitors risk concentrations; and

·         monitors compliance, regulatory obligations and emerging risk issues.

Divisional risk management

·         develops division-specific policies, controls, procedures, and monitoring and reporting capability that align to the frameworks approved by the BRMC.

Independent internal review

Group Assurance

·         reviews the adequacy and effectiveness of management controls for risk.

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Checklist of Westpac’s compliance with ASXCGC’s recommendations

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Directors’ report

Our Directors present their report together with the financial statements of the Group for the financial year ended 30 September 2009.

1. Directors

The names of the persons who have been Directors, or appointed as Directors, during the period since 1 October 2008 and up to the date of this report are: Edward (Ted) Alfred Evans, Gail Patricia Kelly, John Simon Curtis, Elizabeth Blomfield Bryan, Gordon McKellar Cairns, Peter John Oswin Hawkins, Carolyn Judith Hewson, Lindsay Philip Maxsted, Graham John Reaney and Peter David Wilson.

Particulars of the skills, experience, expertise and responsibilities of the Directors at the date of this report, including all directorships of other listed companies held by a Director at any time in the past three years immediately before 30 September 2009 and the period for which each Directorship has been held, are set out below.

Name: Ted Evans AC,
BEcon (Hons.)

Age: 68

Term of office: Director since November 2001. Chairman since April 2007.

Date of next scheduled re-election: December 2009.

Independent: Yes.

Current directorships of listed entities and dates of office: Navitas Limited (since November 2004).

Other principal directorships: Nil.

Other interests: Member of the Asia Pacific Regional Advisory Group of the International Monetary Fund.

Other Westpac related entities directorships and dates of office: Nil.

Skills, experience and expertise: Ted has extensive experience in the financial sector, having joined the Australian Treasury in 1969. From 1984 to 1989 he held the position of Deputy Secretary and was Secretary to the Treasury from 1993 to 2001. From 1976 to 1979 he was a member of the Australian Permanent Delegation to the OECD in Paris and, from 1989 to 1993, Executive Director on the Board of the International Monetary Fund, representing Australia and a number of other countries, mainly in the Asia Pacific region. He was a Director of the Reserve Bank of Australia from 1993 to 2001 and the Commonwealth Bank of Australia from 1993 to 1996.

Westpac Board Committee membership: Chairman of the Nominations Committee. Member of each of the Audit, Risk Management and Technology Committees.

Directorships of other listed entities over the past three years and dates of office: Nil.

Name: Gail Kelly,
Dip. ED, BA, MBA, Doctor of Bus.

Age: 53

Term of office: Managing Director and Chief Executive Officer since February 2008.

Date of next scheduled re-election: Not applicable.

Independent: No.

Current directorships of listed entities and dates of office: Nil.

Other principal directorships: The Melbourne Business School Limited and the Financial Markets Foundation for Children.

Other interests: Member of each of the Financial Services Advisory Council and the Australian Bankers’ Association.

Other Westpac related entities directorships and dates of office: Director of St.George Bank Limited (since December 2008). Director of Westpac New Zealand Limited (since February 2008).

Skills, experience and expertise: Immediately prior to her appointment at Westpac, Gail served as Chief Executive Officer and Managing Director of St.George Bank Limited for five and a half years. Between October 1997 and December 2001, Gail was employed at the Commonwealth Bank, firstly as General Manager, Strategic Marketing, and later as Head of Customer Service and a member of the bank’s Executive Committee. Gail began her career at Nedcor Bank, one of the largest banks in South Africa, where she held various General Manager positions, including HR, cards and personal banking.

Westpac Board Committee membership: Member of each of the Sustainability and Technology Committees.

Directorships of other listed entities over the past three years and dates of office: St.George Bank Limited (January 2002 — August 2007). Gail was reappointed as Director of St.George Bank Limited effective on and from 1 December 2008 when St.George Bank Limited became a subsidiary of Westpac.

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