News: WBC UPDATE 2-Australia's Westpac hires veteran banker McFarlane as chairman to tide over...

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SYDNEY, Jan 23 (Reuters) - Westpac Banking Corp (WBC) on Thursday named banking veteran John McFarlane as chairman, entrusting the former Barclays BARC.L boss to help steer it through the fallout of a massive money-laundering scandal.

The appointment comes less than two months after Australia's No. 2 bank was embroiled in the scandal and at a time of wider gloom for the sector following damaging revelations from a government-backed inquiry into misconduct in the industry.

Investors and analysts cheered the news, given McFarlane's extensive credentials, and the urgent need for stability at the scandal-hit bank, which is still looking for a new chief executive.

"The market should react positively to it, he has significant Australian banking experience, significant British banking experience, and the Australian market knows him well," said senior Credit Suisse banking analyst Jarrod Martin.

McFarlane, who for a decade was CEO of Westpac's rival Australia and New Zealand Banking Group (ANZ) and was chairman of British bank Barclays BARC.L until May last year, will assume charge on April 2 and oversee the search for a new CEO.

"My focus initially will naturally be on resolving the company's current issues but equally important, to position it as quickly as possible for long-term success," McFarlane said in a statement.

He warned however, that the appointment of a "world-class" CEO could "take time".

Westpac's money laundering scandal came to light in November when regulator AUSTRAC launched legal action against Westpac, accusing it of enabling 23 million payments in breach of anti-money laundering laws, including the facilitation of offshore payments relating to child exploitation.

It led to the resignation of Chief Executive Brian Hartzer and forced current Chairman Lindsay Maxsted to bring forward his retirement.

At last month's annual meeting, the lender's shareholders voted down executive pay for a second year due to investor outrage over the scandal.

Last week, mining giant BHP Group (BHP) said Maxsted will not stand for re-election as a director on its board.