Commonwealth Bank is reportedly set to negotiate with hundreds of clients of collapsed financial planning group Storm Financial in a bid to head off any legal action against the bank.
According to a report in the Sydney Morning Herald, CBA has a team of people negotiating with Storm clients to reduce the amount owed to the bank by the clients.
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CBA was the main provider of mortgages and margin loans to Storm clients, and a class action being run by law firm Slater & Gordon is expected to take aim at the bank over its role in the advice given to Storm clients.
But the settlements would help the bank dodge a potentially damaging public relations nightmare.
“In this climate, it is appropriate that the bank is seeking appropriate legal arrangements with its customers to ensure that any rearrangements of facilities are final and conclusive, to allow all parties to move on,” the bank said a statement.
All the deals will require the former Storm clients to sign away their right to take legal action against the bank, which continues to defend its position.
“The bank does not concede that it is liable in any way in relation to the collapse of Storm or the effect of that collapse on ex-clients of Storm who are bank customers.”
Meanwhile, the receivers of Storm Financial are asking for around $10 million for the business, which had $2.4 billion of assets, loans and liabilities under advisement when it collapsed in January.
Around 60 potential bidders have until 20 March to examine a 16-page information memorandum prepared by business broker Kenyon Prendeville.
The asking price is around two times recurring revenue, a big discount to the usual 3 to 3.5 times revenue that financial services firms usually trade on.
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