Think long and hard about who you bank with.
Bankwest fell over in the global financial crisis and was purchased by the CBA (Commonwealth Bank) for a low $2.1 billion. CBA then set about gutting the Bankwest loan book, calling in anything that they didn’t like. They had a commercial reason to do it: any loan that ‘fell over’ would reduce the ultimate price they paid for Bankwest – and they had already made a killing, buying low.
CBA went overboard.
“The case of nursing home developer, Peter Walsh, highlights one of the central allegations of the Unhappy Banking lobby of disgruntled Bankwest customers”, reported Banking Day on 10 April this year. “This is the supposed practice of valuers engaged by the bank being instructed to adopt artificially low values in the course of facility reviews. These low valuations lead, in turn, to breaches of contract (such as excessive loan-to-valuation ratios) and allow the bank to appoint receivers and sell the security property.
Bankwest and its owner, CBA, now face a Senate Inquiry and are targeted by the growing Unhappy Banking collective.
On Monday July 9 the CBA backed Bankwest again smashed a small business, this time the revered Sandown Hotel in Newtown, a music venue owned by Tony Townsend and his family. Three men in suits walked in at midday. “They didn’t call me, they just walked in”, Tony told the Sydney Morning Herald. Read the story, here.
Bankwest had earlier called in a $3.5 million loan, and Tony had frantically set about refinancing. The $16,000 monthly interest bill defaulted to $48,000 which was impossible to meet.
Ferrier Hodgson now controls the venue on behalf of the bank, and will determine how to sell it. Tony Townsend and his family are out the door, with nothing to show for seven years work.
Bankwest advertises with a ‘Happy’ theme.
CBA have been ruthless with former Bankwest clients. CBA also has form as tough on businesses, with several cases known to CX that involve harsh but legal actions that have led to considerable personal duress for otherwise honest and reputable business owners and clients of the bank.
CX would generally recommend spreading banking facilities across more than one bank, and avoiding giving all security to one bank – which then holds absolute power.
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