Westpac CEO Brian Hartzer was allegedly more worried about cancelling a Christmas booze-up than dealing with the shocking scandal now engulfing the bank.

This morning it was revealed the high-profile banking boss had been pushed out of the top job as Westpac battles an investigation by Australia's financial intelligence agency over a money laundering and child exploitation scandal.

The bank's leader will step down on December 2 with its chairman Lindsay Maxstead saying this morning the board accepts the "gravity" of the issues raised by AUSTRAC.

But according to explosive claims published in The Australian today, Hartzer seemingly failed to comprehend that "gravity" as recently as yesterday afternoon when he allegedly sent a staff email confirming the company's upcoming Christmas party had been cancelled.

Earlier that day, it was reported he held a top-secret meeting with senior players to discuss the child exploitation claims that have rocked the banking giant.

But according to The Australian, he seemed to be less concerned with the accusations levelled against the bank, instead focusing on riding out the furore.

Sources told the publication Hartzer said the current scandal was "not an Enron or Lehman Brothers" and the average Aussie wasn't overly concerned with the story, so "we don't need to overcook this".

He also allegedly discussed ways of deflecting attention by pushing staff to "get mortgages going and we've got to get NPS (net promoter score) going".

He also allegedly said he was "very sorry" but the staff Christmas party had to be cancelled over fears it would attract more negative press.

"Unfortunately in the heightened media environment it will not look good if we have our staff whooping it up with alcohol," he said, according to The Australian, before sending the email.

He also reportedly tried to convince bank leaders the story "was not playing out as a high street issue".

"We all read the Fin (Australian Financial Review) and The Australian, and we all read that and think the world is ending," he said, according to the newspaper's two sources.

"But actually for people in mainstream Australia going about their daily lives, this is not a major issue, so we don't need to overcook this.''

But Hartzer's claims seem to have fallen on deaf ears, with his resignation confirmed this morning.

"As was appropriate, we sought feedback from all our stakeholders, including shareholders, and having done so it became clear that board and management changes were in the best interest of the bank," Westpac group chairman Lindsay Maxsted said in a statement released to the Australian Securities Exchange.

Westpac has been contacted to determine whether the bank confirms or denies Hartzer's comments, but a response has not been received.

While the bank has not specifically addressed the exact reason behind Hartzer's departure, the public reaction to his alleged comments yesterday has been brutal, with many convinced they may have played a role in his downfall.

His sensational comments have been variously described as "extraordinary", "tone deaf" and "wrong" on social media.

"Who on earth did Brian Hartzer speak to before coming to the conclusion that 'for people in mainstream Australia going about their daily lives, this* is not a major issue'?" The Australian reporter Stuart Condie said in a tweet, while ABC News Breakfast co-host Michael Rowland described the situation as "Brian Hartzer's 'Prince Andrew Interview' moment".

But the overwhelming reaction among the Australian public has been outrage over Hartzer's $2.7 million "golden handshake" – equivalent to 12 months' pay.

WHO IS BRIAN HARTZER?

The outgoing Westpac chief executive was born in New York and educated at the prestigious Princeton University, where he graduated with a Bachelor of Arts in European history.

The 52-year-old, who moved to Australia around a quarter of a century ago, originally worked for ANZ.

But in 2007 he was snubbed by the bank's board when it came time to promote a new ANZ head, and two years later Hartzer left Australia for a gig in London at the Royal Bank of Scotland.

After his marriage broke down and his wife returned to Australia with the couple's four children, Hartzer eventually followed after securing a job at Westpac in 2012.

He became Westpac CEO in 2014 following the departure of previous boss Gail Kelly.

According to the Australian Financial Review, Hartzer and his second wife moved into a $12.75 million Vaucluse mansion that same year.