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Bankwest accused of GST rort at hearing

Scott Murdoch     The Australian     August 11, 2012

BANKWEST will investigate claims it retained the tax benefits of newly developed properties that were forcibly sold when the bank reviewed its lending portfolio after it was bought by the Commonwealth Bank.

The bank's executives faced intense criticism yesterday at a Senate inquiry that was established after a flood of claims that Bankwest unfairly called in millions of dollars worth of commercial loans in the aftermath of the global financial crisis.

The hearing was told that Bankwest ordered a widespread review of its lending book after its former parent, HBOS, sold it to CBA for $2.1 billion when it was on the verge of collapse in late 2008.

Nationals senator John Williams said he had received advice Bankwest had retained the GST components of a number of mortgages which covered new residential property developments that had been placed in receivership.

Senator Williams said the GST credits, which were accrued after the properties were sold by receivers and the proceeds given to the bank, should be declared to the Australian Taxation Office.

"I've received advice that this has been done right through your network, that you have held on to the GST collections," he said. "I want you to see if this had happened; it should go to the ATO. I think that its very unAustralian."

Senator Williams said one case between Bankwest and an aggrieved customer had already been examined by a former judge.

Bankwest chief executive Rob De Luca said the bank would investigate the claims.

"It is one that we will need to look into. It's not a widespread issue that I'm aware of," Mr De Luca said.

"This is an issue that needs to be addressed. I don't think that the ATO would be very impressed at all," Senator Williams said at the inquiry, which held its last day of hearings in Sydney yesterday.

Mr De Luca, a former CBA executive who was appointed to head Bankwest, was also forced to defend the bank against claims it radically changed its valuation criteria on property loans, which forced dozens of accounts into default.

Bankwest aggressively grew along the east coast by targeting the property and tourism sectors, which were among the hardest hit in the global downturn.

The inquiry heard tearful recollections from customers who had lost properties after Bankwest foreclosed loans. Geoff Shannon, who runs the advocacy group UnHappy Banking, said the foreclosure of a property development had nearly ruined his family.

National Australia Bank later told the hearing that domestic competition remained intense, especially in retail deposits and mortgage segments.

NAB chief financial officer Mark Joiner dismissed claims that the big banks were too profitable.

"If you allow the profitability of the system to drift away, then you put the AA rating of the sector at risk," he said.

"If you lose the AA rating of the banking system, then that puts the sovereign credit rating at risk," he added.

Mr Joiner said NAB believed that a corporate bond system had to be developed to ease the funding pressure on the domestic banks.

Last modified onTuesday, 28 May 2013 05:59

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