Australian bank class action ‘could be worth billions’

commonwealth bank sign

Promoters of a class action for “victims” of Commonwealth Bank’s $2.1 billion takeover of Bankwest in 2008 say it could be the largest litigation of its type, worth billions of dollars.

Anti-bank advocate Geoff Shannon, who founded the Unhappy Banking website, said yesterday he had secured the backing of an “international private funder” and that the law firm Levitt Robinson had been engaged to work on the case.

He said CBA’s primary motive for defaulting commercial customers after the Bankwest acquisition appeared to be “saving money on what it had to pay to purchase Bankwest”. “It appears CBA were attracted to do so because of clawback provisions in the Bankwest purchase agreement,” Mr Shannon said.

CBA has consistently denied the allegation that it was in its commercial interest to foreclose on Bankwest customers.

In a July letter to the Senate economics legislation committee, group general counsel David Cohen angrily denied that the bank had manufactured defaults.

He said some Bankwest customers had a “myopic belief that somebody other than themselves must be responsible for how events unfolded”.

In August last year, Mr Shannon failed in private litigation against CBA over the collapse of his company 33 Electra, the developer of a Bankwest-funded $14.5 million residential project on the north coast of NSW.

In that case, where Mr Shannon ended up having to represent himself, a NSW Supreme Court judge said the businessman was not deliberately dishonest but described him as an unreliable witness, when his answers were compared to contemporaneous documents.

bankwest

Mr Shannon has called the class action RG10 Targeted Litigation, with RG10 the worst internal risk grade for CBA loans.

He said CBA set out to change the benchmarks on performing Bankwest loans, which had a fair to good rating, so that it could artificially re-grade them to RG10 and place the borrowers’ assets in receivership.

“Through significant research, we’ve learned a massive amount about the Bankwest purchase and subsequent actions,” he said.

“This is not just about money. It’s about holding CBA to account for the actions that have had an enormous and terrible impact upon former customers of the bank and the wider Australian community.”

Unhappy Banking, he said, had already had 150 registrations for the class action on its website, involving losses worth $550m

Levitt Robinson principal Stewart Levitt is currently leading another class action against CBA over the Storm Financial collapse.

Both sides are making their final addresses to the Federal Court in Brisbane.

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Source: http://www.theaustralian.com.au/business/financial-services/bank-class-action-could-be-worth-billions/story-fn91wd6x-1226754534315#