ANALYSTS were last night seeking clarification from the Commonwealth Bank on the extent of its exposure to troubled childcare services provider, ABC Learning Centres.
CBA has moved in recent weeks to secure loans and other assets it has at risk to ABC by registering formal charges with the Australian Securities and Investments Commission.
Charges are formal agreements between borrowers and lenders which establish priority rights to the specific assets in the event of default.
However, there are apparent discrepancies in the wording of one of the charge documents lodged with ASIC on July 10.
In clause 2.6 of the document that was signed by ABC founder Eddy Groves and CBA risk management executive Clyde Davies, the bank asserts that it may be able to claim assets of up to $1.25 billion from ABC.
However, in clause 2.8, the charge document asserts that CBA can only recover $125 million from its client.
It has been known in the market for some months that CBA has the most at risk to ABC, but the precise extent of the exposure is in doubt.
Some analysts have speculated that the CBA exposure is $500 million.
CBA spokesman Bryan Fitzgerald last night refused to comment, saying the bank was not able to discuss client matters.
ABC Learning is undergoing a corporate restructure after its share price was pummelled earlier this year after hedge funds and other investors shorted the stock.
The short-selling was spurred by rumours that Mr Groves had funded his holding of shares in the company through margin loans.
ABS Price at posting:
0.0¢ Sentiment: None Disclosure: Held
