Paul McIntyre: Westpac mix-up fires up markets

It wasn't just the Melbourne Cup that had tongues wagging loosely on Tuesday.

It was a boring old bank called Westpac, in fact, which fired up the markets by accidentally sending an email of its full-year results to 37 analysts two days before they were supposed to know anything.

"I was in my office thinking what an enjoyable 48 hours I had ahead of me," Westpac chief executive David Morgan told a media briefing after having been forced to bring forward the bank's profit announcement a day.

"Are we embarrassed? Of course we are. This is a mistake that should not have happened. We are determined to take the necessary steps to make sure it doesn't happen again."

That's about as sharp as the language gets from Morgan, who typically turns to banker-speak when talking about his business.

Try this, for instance, when asked this week about his take on the economy: "The outlook for the macro economy and the resultant financial system aggregates is not a source of major concern as we consider our performance in the year ahead."

Much better language from a big banker, you would have to say. But back to that dodgy email.

On Tuesday at 4.32pm Westpac said it sent a template by email to analysts which carried sensitive earnings figures which it thought were blocked out. It's a traditional practice by Westpac in which the bank tries to assist analysts prepare for its full-year profit announcement by highlighting reclassifications of previous-year earnings to fit the format of the latest results.

Two analysts, however, discovered in moving the files into a new format on their systems that they now had details of 2004-05 earnings and interest margins - very bad news indeed for Westpac's grand plans to unveil a record $2.8 billion net profit.

According to Westpac, the two analysts immediately told their compliance departments and the bank that they held price-sensitive information. About half an hour after the initial template was sent in error, Westpac sent out another email requesting all recipients to delete the previous correspondence.

"Further to the email that was sent at 4.32pm, due to an error in the file it would be appreciated if you could delete the email and all its attachments," the bank's investor relations department said.

"An updated email will be sent shortly. It would be appreciated if you could send a reply to andrewbowden@westpac.com.au confirming this request has been actioned."

Then at 8pm Westpac's top legal adviser got in on the action, informing the analysts, the Australian Stock Exchange and the Australian Securities and Investments Commission that the bank's first email may have disclosed market-sensitive data.

Westpac chief financial officer Phil Chronican said the bank had opted to allow trading to resume on Wednesday morning because it was comfortable the analysts who had received the email had deleted it.

But after trading started on Wednesday, Chronican said, Westpac executives were aware "the chain had been broken" and the numbers had been inadvertently distributed. Share trading was halted for several hours as the annual results were announced a day early.

Before the halt in trading, Citigroup had been the biggest buyer of bank shares and ABN Amro and Deutsche the major sellers.

Chronican downplayed any effect the information might have had on Westpac shares because "most of the information out there was positive" but the shares had traded lower.

He also said it was still unclear whether those responsible for the blunder would lose their jobs.

Paul McIntyre is a Sydney journalist