SYDNEY (Reuters) - The board of Australia’s second largest bank on Friday apologized unreservedly for 23 million breaches of money laundering laws, but stood by management despite pressure from politicians to review its leadership.

FILE PHOTO: A pedestrian looks at his phone as he walks past a logo for Australia's Westpac Banking Corp located outside a branch in central Sydney, Australia, November 5, 2018. REUTERS/David Gray/File Photo

Westpac Banking Corp WBC.AX said its board met to discuss allegations by financial crime watchdog AUSTRAC that it ignored red flags for years, including payments between known child exploiters.

Chairman Lindsay Maxsted said the bank would hire unspecified independent experts to run an overhaul of its anti-money laundering systems, including a review of accountability. The bank had also started discussions with community groups about further steps to fight child exploitation.

“The notion that any child has been hurt as a result of any failings by Westpac is deeply distressing and we are truly sorry. The board unreservedly apologizes,” Maxsted said in the statement.

“Our Board, CEO, and management team are fully committed to fixing these issues and we are taking all steps necessary to urgently close any remaining gaps and fix our policies and procedures so that this can never happen again.”

The scandal had triggered calls for the resignation of top executives and directors, including Chief Executive Officer Brian Hartzer, and is likely to be a focus for the bank’s annual meeting next month.

SCALE OF WRONG-DOING ‘INCREDIBLE’

Goldman Sachs earlier cut its one-year share price target for Westpac by a tenth, citing potential knock-on effects including fines, class actions, loss of customers and capital concerns.

“In all cases, banks underperform peers in the 12 months after the incident by an average of 18%,” the U.S. investment bank said.

The downgrade struck another blow to shareholders of Westpac, with shares falling a further 1.6% on Friday, taking the total value of its losses to A$6.4 billion ($4.3 billion)since the lawsuit was announced. The broader share market .AXJO was slightly higher.

Bill Bovingdon, chief investment officer of debt fund Altius Asset Management, which manages over A$2 billion, told Reuters the company had cut its credit risk of Westpac to “high” from “moderate” and started reducing its exposure to the bank’s bonds.

A day after the prime minister said the Westpac board should review the CEO’s future, Attorney General Christian Porter said the seriousness of the Westpac lawsuit “looks like it’s off the charts”.

“You’re obviously looking to ensure that whatever outcome occurs, that the people are held – and the organization is held – responsible in a big way for the size and scale of its misfeasance,” the Australian Financial Review newspaper quoted Porter as saying in an interview.

“The size and scale of the wrongdoing here looks to be incredible.”

Some of Australia’s big pension funds said they have started reviewing their positions in Westpac.

A spokesman for Christian Super, which manages the retirement money of religious organization employees, said the AUSTRAC allegations were “of significant concern (and) our team are currently reviewing the information available and will determine any actions in line with our investment framework”.

Pat Hobson, who worked as a Westpac branch and call center salesperson for 28 years and owns a few thousand Westpac shares, said staff were tested on regulatory compliance every six months.

“It was more just click the buttons and get it out of the way, get it done, get back on the phones because you had your KPIs to achieve,” Hobson, who left the bank in 2015, told Reuters by telephone.

When Hobson heard about the AUSTRAC allegations she said she felt “absolutely gutted for my friends who are still working there, and very let down as a shareholder.”