By Danny John
Westpac has axed its package of shareholders benefits that offered discounted deals to investors, claiming it has been too expensive to run and has suffered from a low take-up.
The scheme was suspended just over six months ago as the bank began a review of the services and to see whether investors were prepared to increase their use of the deals on offer.
These included cheaper deals on term deposit accounts, margin loans and lower brokerage fees. The bank announced in a letter to shareholders today that most of the services have been axed as at the end of the June 30 2009 financial year.
Westpac said that only 10 per cent of its investors had taken advantage of the benefits and that after its merger with St George - and an expansion of the brands that it now has - the service was costing too much to operate given the actual take-up.
This morning, shortly after the market opened, Westpac stock was up 13 cents, or 0.7 per cent, at $19.81.
The bank also said that feedback from shareholders had indicated that many of the services were not relevant to their needs and offered little value as a result.
"We trust that shareholders appreciate the need to make these changes which are in the best interests of all shareholders," company secretary Anna Sandham said in a letter sent out today.
However, those investors who have an existing discounted term deposit account or margin loan, provided by the group's BT funds management subsidiary and with a start date before June 30, will continue to benefit from them until they expire.
And those shareholders with a no-administrative-fee monthly Choice account will also be able to use that service for the foreseeable future as long as they as hold 500 or more Westpac shares.
The bank will no longer issue the benefit cards that shareholders used to access the previous on-going offers.
Westpac is the latest in a long line of institutions to have dropped their shareholder discount schemes with rivals citing similar reasons for their decisions. Occasional offers on travellers cheques and other limited services, however, remain in some cases and Westpac said it would offer one-off benefits from time to time.
ANZ cut its program two years ago although National Australia Bank has maintained its package of shareholder benefits including discounted fees or no administrative payments on specific bank accounts and credit cards.
SMH