Bankwest savaged by NEXTDC's Scroggie as "aggressive" and "appalling"

By on
Bankwest savaged by NEXTDC's Scroggie as "aggressive" and "appalling"

"Self-policing of banks has been a laughable failure".

Chief executive of data centre play NEXTDC Craig Scroggie has publicly attacked Bankwest over what the executive claims is “an aggressive and overhanded enforcement default for a technical change of control condition” over a debt bundled-up with the long-running APDC acquisition.

The very public spat between Scroggie and the Commonwealth Bank-owned institution centres around a $29 million debt owed by recent NEXTDC acquisition APDC (ASX: AJD) that the executive claims is the subject of a ham-fisted call-in despite a long-running public takeover process.

It’s still unclear what prompted Bankwest’s alleged action, but the dispute has enraged Scroggie sufficiently to point a public flamethrower at Bankwest’s manoeuvres.

In particular he claims that Bankwest went down the debt enforcement road over a technicality relating to ownership and control of the debt, essentially claiming that Bankwest treated the facility as delinquent when it knew full well about the proposed takeover all along and that its new owners were good for the money.

“Being bullied or blackmailed by the bank on which you rely to grow and support your business is sadly par for the course for many. At NEXTDC (ASX: NXT), we have certainly seen our fair share of appalling bank behaviour over the years as we have built the company from a start up to over $2bn, but our most recent experience with Bankwest (division of CBA) is worthy of note,” Scroggie fumed on LinkedIn.

“AJD owed Bankwest a mere $29 million, with asset backing of $261 million…backed by a superior credit party in NXT. Yet, Bankwest still insisted on launching enforcement action against AJD, including sending NXT a threatening legal letter in its capacity as a tenant to AJD.”

“No bank launches an aggressive and overhanded enforcement default for a technical change of control condition in an agreed public markets context unless the credit is already delinquent,” Scroggie said.

Taken on face value, Bankwest’s alleged action does appear somewhat unusually short-sighted.

Transactions involving the transfer of debt control are common in acquisitions takeovers, with most banks usually preferring a rollover or upgrade in credit quality. In simple terms, takeovers can be a gift for lenders because they can realise payment of the loan, and the money they make on it, early.

Scroggie has clearly given up on trying to settle things behind closed doors, lining-up Bankwest and the CBA for a kicking, invoking the Banking Royal Commission.

“Anyone would agree the self-policing of banks has been a laughable failure – they have learnt nothing. They espouse value statements like “Our customers are at the heart of everything we do”… “We take ownership”. As the 1.5-star online customer reviews of Bankwest suggests, the customers beg to differ!” Scroggie said in his LinkedIn post.

“NXT will navigate this road bump, and financially it is of little concern. What does concern me is how badly Bankwest has behaved, which needs to be called out publicly. This just goes to highlight yet another example of bank bullying and bad banking conduct in an already broken system,” Scroggie said.

“Let’s hope for the good of the country, when the final report is delivered by the Royal Commission into Misconduct in the Banking Industry some genuine wholesale changes are made to the Australian banking landscape, starting with culture.” 

Bankwest is playing a straight bat to the ruckus.

“This is a confidential matter and discussions between the parties involved are continuing,” a spokesman for Bankwest told iTnews.

Got a news tip for our journalists? Share it with us anonymously here.
Copyright © . All rights reserved.

Most Read Articles

Log In

  |  Forgot your password?