The royal commission into misconduct in the banking and financial services continues in Melbourne with a second week of round 3 hearings into the impact bank lending practices have had on small business ventures.
Giving evidence this week in two case studies involving loans from CBA-owned BankWest are Michael Doherty, a hotel developer sent into receivership by the bank just as his Hobart venture, Hadleys Hotel, was about to open; and Stephen Weller, who ran a pub in Macksville that eventually went into receivership after the bank cut his loan term from 15 years to 12 months, raised interest rates and then demanded he sell the pub within the months, despite the fact that Weller never missed a repayment on his loan.
In Doherty’s case, the commission heard that the bank decided it no longer supported financing the project, told the developer to refinance with another bank and demanded a $980,000 “break fee” if he did so.
For Weller, after the bank cut short the length of the loan, it then moved the “expiry date” twice, until he had just 12 months in which he was expected to repay the more than $3 million outstanding.
Today, the Commonwealth Bank’s chief credit officer Peter Clark was a witness offering the bank’s views, since he was in charge of problem business loans at the time.
When counsel assisting Albert Dinelli asked Clark to explain a “facility expiry date”, the response led commissioner Kenneth Hayne to quip that the answer reminded him of one of Monty’s Python’s most famous routines — the dead parrot sketch.
Here’s how it went down, courtesy of the ABC’s Michael Janda:
Counsel assisting Albert Dinelli: “What is a facility expiry date?”
Witness Peter Clark: “That was when the facility finally expires, is due to be no more. I’m not quite sure how I can explain an expiry date, it is what it is.”
Dinelli: “That’s quite an existentialist answer.”
Commissioner Kenneth Hayne: “All I can hear is dead parrots Mr Dinelli.”
The royal commission hearings continue this afternoon with more BankWest business customers.
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