Westpac Voluntarily Delisted ADRs From NYSE

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The ADR of Australian Bank Westpac ADR used to trade on the NYSE under the ticker WBK. Westpac voluntarily delisted its ADRs from the NYSE effective January 31, 2022. Hence the last day WBK traded on the NYSE was Friday, Jan 28, 2022. Below is the delisting announcement from the bank’s site:

10 January 2022
WESTPAC BANKING CORPORATION NOTIFIES NYSE OF INTENTION TO DELIST AMERICAN DEPOSITARY SHARES

NEW YORK—Westpac Banking Corporation (NYSE: WBK) (“Westpac,” “we” or the “Company”) announced today that it notified The New York Stock Exchange (the “NYSE”) of its intent to voluntarily delist its American depositary shares, each representing the right to receive one ordinary share of the Company (the “ADSs”), from the NYSE. The Company intends to file a Form 25 with the Securities and Exchange Commission (the “SEC”) on January 21, 2022 to delist the ADSs immediately thereafter. The Company expects that the delisting will occur ten calendar days after the filing of the Form 25 so that trading will be suspended on January 31, 2022 prior to the market opening. The Company has not arranged for listing or registration on another U.S. national securities exchange or for quotation of the ADSs in a quotation medium. In line with the Westpac strategy, Westpac has chosen to simplify its share listings to Westpac ordinary shares. In light of this, it is withdrawing the listing of Westpac sponsored ADSs.

Source: Westpac Banking Corporation notifies NYSE of intention to delist American depositary shares, Westpac

The following is the ADR termination notice from the depository BNY Mellon:

NOTICE TO HOLDERS OF AMERICAN DEPOSITARY SHARES (“ADSs”) EVIDENCED BY AMERICAN DEPOSITARY RECEIPTS (“ADRs”) REPRESENTING DEPOSITED ORDINARY SHARES OF: WESTPAC BANKING CORPORATION ONE ADS REPRESENTS ONE ORDINARYSHARE CUSIP: 961214301 AND UNDERLYING ISIN: US9612143019

As owners and beneficial owners of the above ADRs, you are hereby notified that The Bank of New York Mellon, as depositary (the “Depositary”), will terminate the Deposit Agreement, dated May 13, 2013 among Westpac Banking Corporation (“Westpac”), the Depositary, and Owners and Holders of ADRs, the (“Deposit Agreement”).

As a result, the existing ADR facility will be terminated effective Monday, January 31, 2022 Under the terms of the Deposit Agreement, you have until at least June 2, 2022 to surrender your Westpac ADRs for  delivery of the underlying shares. If you surrender ADRs for delivery of the underlying shares, you must pay a cable fee of $17.50, a cancellation fee of up to $0.05 per ADRs surrendered and any applicable U.S. or local taxes or governmental charges. Payment should be made payable to The Bank of New York Mellon.

Subsequent to June 2, 2022 under the terms of the Deposit Agreement, the Depositary may attempt to sell the underlying shares. If the Depositary has sold such shares, you must surrender your ADRs to obtain payment of the sale proceeds, net of the expenses of sale, any applicable U.S. or local taxes or government charges and a cancellation fee of up to $0.05 per ADRs.

To surrender your ADRs, the address of the Depositary is: The Bank of New York Mellon, 240 Greenwich Street, Depositary Receipts Division – 8th Floor, Attention: Cancellation Desk, New York, NY 10286. Registered or overnight mail is the suggested method of delivering DRs to the Depositary.

Source: BNY Mellon 

Investors  holding Westpac ADR may have many questions on what happens next. The following post may provide some answers:

Below are answers to some common questions:

1.Will WBK move to the OTC market and trade there?

I contacted their investor relations. They confirmed the Board of Directors does not plan to move it to OTC. But BNY Mellon or other depositories may create OTC shares with the ordinary shares they own and let them trade there.

2.Can you sell WBK now?

Nope. WBK stopped trading on the NYSE on Jan 28th. So you cannot sell it on the market anymore.

3.So what should you do if you own Westpac ADR?

It does not look like WBK will move to the OTC markets like other stocks in the past. You may want to contact BNY Mellon and confirm this.  So your only other options are:

a) To redeem the ADR and receive the underlying ordinary share (or)

b) Receive cash proceeds after June 2nd by surrendering ADRs to BNY Mellon.

“Subsequent to June 2, 2022 under the terms of the Deposit Agreement, the Depositary may attempt to sell the underlying shares. If the Depositary has sold such shares, you must surrender your ADRs to obtain payment of the sale proceeds, net of the expenses of sale, any applicable U.S. or local taxes or government charges and a cancellation fee of up to $0.05 per ADRs.”

To do either of the options, follow the process mentioned in the Termination Notice above.

Once you covert your ADRs to ordinaries then there is nothing to do. You will directly own Westpac shares that trade on the domestic market in Australia. You will have the same rights like any other investor in Australia. You will automatically receive dividends as usual and will be qualified for all corporate actions such as rights offering, voting, etc.

4.Is there a deadline to convert to ordinary?

Yes. You have to surrender your ADRs before June 2, 2022 and receive the ordinary shares.

5.What if you want to cash out the ADRs?

Yes you can. But its possible only after June 2nd. As noted above, once your surrender the ADRs to BNY Mellon and request them for cash payment, they will send the corresponding ordinary shares and send you the sale proceeds less any fees and taxes.

6.What is the ticker of Westpac ordinary?

Once converted you will receive Westpac ordinaries that trade on the Australian Stock Exchange with ticker WBC. In Yahoo Finance, enter WBC.AX.

7.What about the share price and average trading volume for WBC?

The current share price of WBC is A$21.52. As one of the top banks, the stocks is very liquid with average trading volume of 9.2 million shares, per Yahoo Finance.

8.What if you want to sell Westpac ordinary and get out?

If you do not want to own Westpac ordinary shares any longer you can sell it on the Australian market just like any other stock and cash out. Of course, you will pay a commission to execute this transaction on the domestic market in Australia. Other fees and foreign exchange will also impact your proceeds.

9.How many Westpac Ordinary shares (WBC) will you get for each Westpac ADR?

Each ADR represented one ordinary share. So for each ADR you own(WBK) you will receive one Westpac ordinary share(WBC).

Updated (4/24/22):

10.If I decide to convert Westpac ordinary shares, are there are any tax consequences?

No. The conversion to ordinary shares will NOT have any tax impacts. The conversion will not be a taxable event. So a gain or loss will not be realized.

11.Could Westpac a depository program on the OTC  markets?

Probably. But that is unlikely to happen in the near future. Their competitor Bank for Australia and New Zealand Banking Group (ANZBY) delisted from NYSE in July 2007. They re-started a DR program on the OTC markets only in December, 2018.

12.Do competitors of Westpac trade on the OTC markets?

Yes. Bank for Australia and New Zealand Banking Group (ANZBY), The National Australia Bank Limited (NABZY), Commonwealth Bank Of Australia Sponsored Australia (CMWAY) and Bank of Queensland (BKQNY) all trade on the OTC markets.

13.Does Westpac trade on the OTC market?

Yes. But with very thin volume under the ticker WEBNF.

14.When I convert to ordinary shares will I get the ordinary on the Australian market (WBC.AX) or the ordinary trading on the OTC market (WEBNF) ?

That depends on the broker. For US investors, Fidelity converted the ADRs to WEBNF per one reader.

15.Will WEBNF pay dividends just like WBK when it traded?

Yes. Absolutely. Your dividend in US $ should be credited by your broker. As of Mar 11, 2022 the dividend yield for WEBNF is 7.61% for a dividend amount of $1.25. The recent dividend payments are below:

11/05/21
Westpac Banking Corp Dividend for WEBNF – $0.4441
05/13/21
Westpac Banking Corp Dividend for WEBNF – $0.4483

16.Where does WEBNF trade and how do I find out the details:

Westpac ordinary on the US markets has the ticker WEBNF. It trades on the OTC market. You can find all the other details at this link:

https://www.otcmarkets.com/stock/WEBNF/overview

Note: Dividend is marked as “N/A” in the screenshot below. But that is incorrect. Dividends will be paid as applicable.

17.How do foreign ordinary shares trade on the OTC market?

Watch this YourTube video to understand the process:


 

18. Which US brokers allow conversion of WBK to Westpac Ordinary Shares?

  1. Fidelity Investments – Yes. Contact them directly for fees and other details. Their fee for this service is under $100 and it takes about a week for the conversion to go through.
  2. TD Ameritrade – No. In order to convert to ordinary shares you have to transfer your ADRs to another broker by opening an account with them. Or surrender the ADRs to the depository before the deadline and receive cash proceeds. TD Ameritrade made a business decision not to perform the conversion to ordinary shares.
  3. Charles Schwab –  Yes. Schwab will be do the conversion to ordinary shares. There is no extra fee for the conversion. But you have to pay the below fees per account. Contact them directly for full details. Schwab Fees for conversion of WBK ADR to WEBNF trading on the US OTC markets:
    S.No. Item Amount
    1 DR Cancellation Fee $0.05 per DR
    2 Schwab Reorganization Fee $39

    So for 100 WBK ADRs the total fees will be $69. The conversion process will take 2 to 4 weeks.

  4. Etrade –  Contact the broker directly for details
  5. Robinhood –  Contact the broker directly for details
  6. Interactive Brokers –  Contact the broker directly for details
  7. Merrill Edge –  Contact the broker directly for details

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Disclosure: Long Westpac

Biotech Stocks Have Plunged So Far This Year

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Biotech stocks are not performing well at least so far this year. In the past two years or so the sector was hot due to a variety of factors including discovery of vaccines for Covid-19, M&A, investors’ interest, etc. However none of that seems to be in favor of biotechs now. The following charts of the SPDR S&P Biotech ETF (XBI) show the dramatic decline in the sector YTD.

SPDR S&P Biotech ETF –  Year-To-Date Return:

Click to enlarge

SPDR S&P Biotech ETF –  1 Year Return:

SPDR S&P Biotech ETF –  5 Years Return:

Source: Google Finance

It remains to be seen if a catalyst emerges to help biotechs in the reminder of the year. Other ETFs like the iShares Biotechnology ETF (IBB) is down 16% and 21% YTD and 1 year respectively.

Related:

Disclosure: No positions

VAT Tax Rates in Europe by Country 2022: Chart

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Most countries of the world have a Value-Added Tax (VAT) that is levied on goods and services. The VAT is a consumption tax and varies widely among the member nations of the EU and the UK. The highest VAT rates for 2022 are in Hungary which charges 27 percent and Croatia, Denmark and Sweden where it is 25 percent according to an article at Tax Foundation. The lowest rates are in Malta, Cyprus, Germany and Romania. Even in the lowest rate countries the VAT is still high relative to US rates. In Germany for instance the VAT rate is 19 percent. The average VAT rate in the EU is 21 percent.

The following chart shows the VAT rates across the EU and the UK in 2022:

Click to enlarge

Source: 2022 VAT Rates in Europe by Cristina Enache, Tax Foundation

However there are some exemptions to the standard VAT rates. Below is an excerpt from the piece:

One of the main reasons for reduced VAT rates and VAT-exempted goods/services is the promotion of equity, as lower-income households tend to spend a larger share of income on goods and services such as food and public transport. Other reasons include encouraging the consumption of “merit goods” (e.g., books), promoting local services (e.g., tourism), and correcting externalities (e.g., clean power).

However, evidence shows that reduced VAT rates and VAT exemptions are not necessarily effective in achieving these policy goals and can even be regressive in some instances. Such reduced rates and exemptions can lead to higher administrative and compliance costs and can create economic distortions. A recent study shows that scrapping VAT reduced rates in EU countries will allow standard rates to drop under 15 percent. To address equity concerns, the OECD instead recommends measures that directly aim at increasing poorer households’ real incomes.

In the US, each state levies sales taxes based on its own laws. For example, the current sales tax for New Jersey is 6.625%. Some goods like food are exempted from this tax. That does not mean all foods are sales tax free. A loaf of bread will be tax free but not a soda bottle. The reason being that bread is necessity while soda is a luxury item. It should be noted that in many states local municipalities or counties will tack on an additional tax to the state taxes. So the overall tax rate will be higher.

Generally tax rates are lower in the US compared to the EU. In fact, in states like Oregon, New Hampshire, etc. the sales tax rate is 0%. Another point is the rates in Europe are national rates. In the US, states decide their own rates.

Performance of S&P 500 Index When Interest Rate Rises: Chart

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The Fed has planned to raise interest rates this year. The forecast is rates will increase at least three times in the year. In anticipation of rising rates and a multitude of other factors including valuation concerns in certain sectors, US equity markets have turned very volatile this year. With interest rates bound to go higher many investors are wondering how stocks would perform this year. According to an article at Plante Moran, stocks have typically earned positive returns when interest rate rises though there were short-term volatility as shown in the chart below:

Click to enlarge

Source: How do stocks typically perform when the Fed raises interest rates?, Plante Moran

Update: 1/26/22:

Related ETFs:

  • SPDR S&P 500 ETF (SPY)

Disclosure: No positions