Storm clouds may yet have a silver lining
The Age
Thursday June 18, 2009
COMMONWEALTH Bank chief executive Ralph Norris has flagged significant concessions to investors who lost billions of dollars in the collapse of Storm Financial, accepting for the first time yesterday the bank had "done wrong".In a mea culpa that admitted significant issues in loans to Storm Financial customers, Mr Norris committed the bank to addressing the plight of customers facing hardship caused by shortcomings in the bank's lending practices."In some cases we have identified shortcomings in how we lent money to our customers involved with Storm Financial," he said. "We are not proud of our involvement in some of these issues and we are working towards a fair and equitable outcome for our affected customers."The sweeping nature of the statement suggests the bank may settle potential legal cases.The bank also announced a suspension on interest repayments for all Storm Financial clients until August 31. The bank had made loans to 2500 Storm Financial clients, both through home loans and margin loans."Our customers can be assured that where we have done wrong, we will put it right," Mr Norris said. "The bank will learn from the mistakes made in relation to lending to Storm Financial customers."He also revealed the bank was continuing to talk to the Australian Securities and Investments Commission about concerns raised in relation to Storm Financial.Commission chairman Tony D'Aloisio welcomed the bank's move, saying it would reduce immediate pressure on investors to accept settlements being pursued by the bank.The co-chairman of Storm Investments Consumer Action Group, Mark Weir, said the announcement was a result of continuing disclosures of the bank's poor lending practices. "I believe it's resulted from a growing mountain of evidence that points to behaviour that was acknowledged by the bank as being outside their general prudential banking practices," he said. "Unfortunately, it's probably overdue, given the level of suffering the victims of this whole affair have been enduring."Revelations about the bank's behaviour include poor documentation of loans and home loans advanced to people who had no hope of repaying the debt.Storm collapsed in January, with losses estimated at more than $3 billion.
© 2009 The Age