Banks in clear with class action deal
Bendigo and Adelaide Bank investors have welcomed the settlement of a class action which targeted its involvement in managed investment schemes peddled by failed forestry group Great Southern Plantations.
Bendigo shares closed 5� up at $12.49 yesterday, with Deutsche Bank noting the agreement had eliminated the risk of a legal defeat "which would have had a material negative impact on the company".
"It also removes the uncertainty of further appeals from the borrowers," Deutsche said.
The settlement provides only a measure of financial relief to the 4350 investors who owe Bendigo $380 million in mainly overdue loans taken out to invest in the Great Southern schemes.
While Bendigo will waive accrued penalty interest on overdue borrowings, the investors covered by the class action have agreed the loans are enforceable and released the bank from the threat of future litigation.
The class action had sought to void the loans on the basis investors were misled by Great Southern, which collapsed in May 2009.
Bendigo said the settlement endorsed its position.
"We have always maintained that the bank's conduct was at all times appropriate and the bank is entitled to be repaid its loans to Great Southern borrowers," managing director Mike Hirst said.
"The terms of this agreement endorse this position and we look forward to working with borrowers as they repay their debts to us."
The settlement is subject to the approval of the Victorian Supreme Court, which had been due to rule on the class action.
