6 Aug 2014

Avoid Commonwealth Bank of Australia

You have choices, and anyone considering a bank would be well advised to avoid the Commonwealth Bank of Australia, or CBA as it is better known. This is harsh advice, but I will make the case now.

For example presently CBA are under pressure to pay well over a hundred million dollars (stop and consider the sum) in compensation after its investment advisers lied, cheated and defrauded thousands of clients. That’s fact. Put simply, CBA leveraged its reputation as a major bank and ripped off ordinary investors. Still fact, which is why I publish it here.

But that isn’t the core story today. The main reason to avoid CBA at all costs is what it did with Bank West. Specifically what it did to Bank West clients, mostly smaller businesses, some known to CX. Because once it got going on them, it  became bold and moved its focus to its own client base and applied the same unconscionable pressure.


Our late lawyer Ross McGylnn worked on cases where Bank West attempted to seize viable businesses. This was an increasing topic of conversation around our meetings over the past eighteen months. (Ross was a scarce commodity in commercial law, and is deeply missed. He died of Prostate cancer early this year.)

Ross advised CX on financial matters generally. His counsel is sorely missed. We relied and respected a learned word.

In regards to Bank West he worked some of those cases for little or no return. He was truly appalled by how CBA treated its clients.


Here is a typical example. Imagine you borrowed from Bank West, for a commercial mortgage or had an overdraft. When the Global Financial Crisis (GFC) hit, Bank of Scotland (HBOS) fell over fast.

CBA saw a genuine opportunity and purchased Bank West for a knock down price, and as if that wasn’t enough, inserted a poison pill into the agreement.

For every commercial loan that fell over, CBA would reduce the tail end payment to HBOS. In other words, CBA had a golden window in which to cherry pick the loan book, and retain only the Bank West accounts it wanted. It could – and did – erase the rest.

CBA set about feverishly reviewing all Bank West loans. Desk top valuations were done by junior staff, working overtime, on properties. Given the GFC had ravaged the market, it was easy to write down the value of almost every property and change the loan ratios. Bank West (CBA) would then give the borrower a short period of time to refinance or fold.

More insidiously, the bank closed, reduced or cancelled overdrafts, usually with minimal notice.  This cut off cash flow, wages could not be paid, and this action alone often bankrupted the businesses concerned.

These were often profitable firms. CBA had absolutely no hesitation – it was operating voraciously, unconscionably, and in our view immorally. It was however lawful. Unlike the current scandal, where the investment advisory arm of CBA broke consumer laws, for which it is currently being slowly hauled to account for.

While every other bank has instances of bastardry, CBA towers high as a corporate vandal. The Commonwealth Bank of Australia should be carefully avoided until at least it acknowledges and compensates ALL its victims; and pledges to operate in an ethical manner.

Right now it cannot be trusted. The organisation is tainted.




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