Westpac Banking : WBC-NZ Banking Group Disclosure Statement - 30 Sep 2016

Disclosure Statement

For the year ended 30 September 2016‌‌‌

General information and definitions 1

Limits on material financial support by the ultimate parent bank 1

General matters 1

Credit ratings 4

Disclosure statements of the Overseas Bank and the financial statements

of the Overseas Bank and the Overseas Banking Group 5

Historical summary of financial statements 5

Guarantee arrangements 5

Ranking of local creditors in liquidation 6

Other material matters 6

Conditions of registration 7

Directors' and the Chief Executive Officer, NZ Branch's statement 9

Index to financial statements 10

Independent auditors' report 70

Certain information contained in this Disclosure Statement is required by section 81 of the Reserve Bank of New Zealand Act 1989 ('Reserve Bank Act') and the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014 ('Order').

In this Disclosure Statement, reference is made to five main reporting groups:

• Westpac Banking Corporation (otherwise referred to as the 'Overseas Bank') - refers to the worldwide business of Westpac Banking Corporation excluding its controlled entities;

• Westpac Banking Corporation Group (otherwise referred to as the 'Overseas Banking Group') - refers to the total worldwide business of Westpac Banking Corporation including its controlled entities;

• Westpac Banking Corporation New Zealand Branch (otherwise referred to as the 'NZ Branch') - refers to the New Zealand Branch of Westpac Banking Corporation (trading as Westpac);

• Westpac New Zealand Limited (otherwise referred to as 'Westpac New Zealand') - refers to a locally incorporated subsidiary of the Overseas Bank (carrying on the Overseas Bank's New Zealand consumer, business and institutional banking operations); and

• Westpac Banking Corporation - New Zealand Banking Group (otherwise referred to as the 'NZ Banking Group') - refers to the

New Zealand operations of Westpac Banking Corporation Group including those entities whose business is required to be reported in the financial statements of the Overseas Banking Group's New Zealand business. Controlled entities of the NZ Banking Group as at 30 September 2016 are set out in Note 25 Related entities.

Words and phrases not defined in this Disclosure Statement, but defined by the Order, have the meaning given by the Order when used in this Disclosure Statement. All amounts referred to in this Disclosure Statement are in New Zealand dollars unless otherwise stated.

In late 2014, the Australian Prudential Regulation Authority ('APRA') initiated a process to reduce Australian bank non-equity exposures to their respective New Zealand banking subsidiaries and branches, so that these non-equity exposures are minimised during ordinary times. On 19 November 2015, APRA informed the Overseas Bank that its Extended Licensed Entity ('ELE') non-equity exposures to New Zealand banking subsidiaries is to transition to be below a limit of five percent of the Overseas Bank's Level 1 Tier 1 capital.

The ELE consists of the Overseas Bank and its subsidiary entities that have been approved by APRA to be included in the ELE for the purposes of measuring capital adequacy.

APRA has allowed a period of five years commencing on 1 January 2016 to transition to be less than the five percent limit. Exposures for the purposes of this limit include all committed, non-intraday, non-equity exposures including derivatives and off-balance sheet exposures.

Further, APRA imposed two conditions over the transition period - the percentage excess above the five percent limit as at 30 June 2015, is to reduce by at least one fifth by the end of each calendar year over the transition period, and the absolute amount of routine New Zealand non-equity exposure is not to increase from the 30 June 2015 level until the Overseas Bank is, and expects to remain, below the five percent limit. For the purposes of assessing this exposure, the five percent limit excludes equity investments and holdings of capital instruments in New Zealand banking subsidiaries.

While the limit and associated conditions do not apply to the ELE's non-equity exposures to the NZ Branch (which is within the ELE), the limit and associated conditions do apply to the NZ Branch's non-equity exposures to the rest of the NZ Banking Group other than Westpac New Zealand Group Limited. As at 30 September 2016, the ELE's non-equity exposures to New Zealand banking subsidiaries affected by the limit was approximately 6.4% of Level 1 Tier 1 capital of the Overseas Bank. Non-equity exposure would need to reduce by approximately $0.6 billion from the 30 September 2016 position to comply with the 5% limit. The Overseas Bank expects to achieve compliance with the 5% limit within the transition period.

APRA has also confirmed the terms on which the Overseas Bank 'may provide contingent funding support to a New Zealand banking subsidiary during times of financial stress'. APRA has confirmed that, at this time, only covered bonds meet its criteria for contingent funding arrangements.

The Overseas Bank is entered on the register maintained under the Reserve Bank Act. The NZ Branch's head office is situated at Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand and the address for service of process on the NZ Branch is Westpac on Takutai Square, 53 Galway Street, Auckland, New Zealand.

The Overseas Bank was founded in 1817 and was incorporated in 1850 pursuant to the Bank of New South Wales Act 1850. In 1982 the Overseas Bank acquired The Commercial Bank of Australia Limited and the Overseas Bank changed its name to Westpac Banking Corporation. On 23 August 2002, the Overseas Bank registered as a public company limited by shares under the Australian Corporations Act 2001 and as of that date the Bank of New South Wales Act 1850 ceased to apply.

The Overseas Bank's principal office and address for service of process is Westpac Place, 275 Kent Street, Sydney, New South Wales 2000, Australia.

Until 1 November 2006, the Overseas Bank operated as a branch in New Zealand. Effective 1 November 2006, the Overseas Bank has operated in New Zealand through both the NZ Branch (a branch of the Overseas Bank carrying on financial markets operations and institutional banking activities until 1 November 2011) and Westpac New Zealand. Westpac New Zealand is a member of the NZ Banking Group.

On 1 November 2011, the NZ Branch transferred additional business activities and associated employees to Westpac New Zealand (For further details refer to Note 2 to the financial statements included in the Disclosure Statement for the year ended 30 September 2013).

As a registered bank, Westpac New Zealand is required to produce its own disclosure statement. Accordingly, further information on Westpac New Zealand is available in Westpac New Zealand's Disclosure Statement for the year ended 30 September 2016.

Westpac Banking Corporation - New Zealand Banking Group 1

Directors

The Directors of the Overseas Bank ('Board') at the time this Disclosure Statement was signed were:

Westpac Banking Corporation - New Zealand Banking Group 2