Bendigo defends loans as legitimate FINANCE ALISON BELL May 29, 2010
THE Bendigo and Adelaide Bank says it is looking forward to proving its loans to Great Southern managed investment scheme investors were legitimate, after being named as a defendant in an investor class action involving the scheme.
The law firm Macpherson+Kelley launched a class action on behalf of 1700 investors in Great Southern's scheme on Thursday, seeking declarations from the Victorian Supreme Court that the loans provided by Bendigo are void or unenforceable.
The investors are seeking to recover the principal and interest paid to Bendigo, Javelin Asset Management and Great Southern Finance (in liquidation) for loans made for entry into the MIS.
Advertisement: Story continues belowThe class action also includes investors who paid cash to buy their interests in projects sold by Great Southern Managers Australia Ltd, which they allege failed to properly disclose key material facts about the sustainability of what were sold as long-term projects.
The managing director of Bendigo, Mike Hirst, said yesterday the bank had always acted within the law relating to the loans. ''We now look forward to demonstrating through the courts what we have always argued specifically, that these loans are legitimate and are required to be repaid by these investors,'' he said in a statement.
Investors in the Great Southern scheme are typically wealthy individuals who have been advised by their accountant or financial planner, and have received significant tax benefits already from their investment, the bank said.
Bendigo noted there were no allegations of wrongdoing by the bank. In February Bendigo said it had $555 million worth of outstanding exposures to its Great Southern Ltd loan portfolio.
At the time the bank flagged that eventual write-offs may exceed its current provision of $27.3 million, but UBS said this could be absorbed from capital.
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