The big four banks unloaded 55.2 million shares to institutional investors on Thursday at $6.65 a share (about $367 million in total).

It said the decision to sell the Zip stake reflected its strategy to simplify the business and ensure efficient use of capital.

The bank’s chief information officer Gary Thursby said Zip’s leadership team had done a “tremendous job” in growing the company and its global expansion.

Meanwhile, Westpac has also partnered with Afterpay to launch a savings and transaction account for the buy-now, pay-later provider's customers.

Afterpay will introduce savings accounts and cash flow tools facilitated by Westpac's digital banking platform to its 3.3 million customers in the second quarter of next year.

"We continue to explore opportunities with Zip, including working to integrate their buy now pay later functionality into our Westpac mobile banking apps and our regional banking brands," Mr Thursby said.

“This will expand our customer offering and expand the customers that Zip can reach.

"We are also working with Zip on other opportunities for consumer, business and enterprise customers that we believe can be mutually beneficial, while continuing to grow our banking relationship with Zip."

Speaking about the partnership with Afterpay, Westpac chief executive Peter King said fintech innovation was "changing banking in important ways", with the digital banking platform part of a long-term strategy to respond to the trend and changing needs of customers.

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting mainly on banking, financial services and wealth.

Prior to joining the team in 2018, Sarah worked in commercial media and produced stories for a current affairs program on public radio.

You can contact her at [email protected].