Bank fire sales of SME property assets prompt call for Senate inquiry into banking

Nationals Senator John Williams is speaking with fellow Senators about the prospect of an inquiry into whether banks are pulling loans to small business clients including farmers, leading to assets being sold at rock-bottom levels.

The National Senator for New South Wales and the National Whip in the Senate says he’s heard of properties going for 17% of their value, nominating one which was sold late last year at $635,000, despite being valued at $4.1 million before the sale.

Williams says his concern was triggered by complaints from constituents about loans being pulled without warning.

“We know that banks and liquidators must sell assets at market value, but if we’ve got a couple of tough years in front of us, it’s a good time to look at the protection for peoples’ assets,” Williams says.

Williams recently met with BankWest head Jon Sutton following complaints about the bank’s treatment of commercial clients after it was taken over by Commonwealth Bank of Australia in 2008. The details of the conversation are confidential, he says.

But Williams says the behaviour of banks more broadly deserves a look, with “appalling” examples of assets sold far below their value.

“The way I see it there’s no protection for individuals when selling their assets,” he says.

Williams says he has spoken with Opposition finance spokesman Mathias Cormann and Greens leader Bob Brown about the prospect of a Senate inquiry, but has not yet spoken to Labor.

“Time will tell whether we move with the inquiry, and what form it would take.”

But he says fears that Australia is heading into rocky economic waters highlight the need to ensure that existing regulations are up to scratch.

“It’s essential we have strong banks; without them we’d be in a terrible mess. But we’ve also got to have fairness.”

But the Australian Bankers’ Association has defended its performance in rural and regional areas over the past decade, saying the sector has stood by customers through droughts and floods.

Chief executive Steven Münchenberg added it was in the banks’ interests to work with clients in difficulty, rather than pull loans.