Macquarie Remains Exposed To Loans

Sydney Morning Herald

Wednesday January 14, 2009

Colin Kruger

MACQUARIE GROUP remains exposed to an unknown number of margin loans despite selling the business to Bendigo Bank last week.

This includes a $10 million exposure to the Storm Financial collapse, which was one of a number of accounts deemed too risky by Bendigo.

"We looked at Macquarie's lending book and acquired those parts which matched our own risk appetite," said Bendigo's spokesman, Will Rayner, yesterday.

A Macquarie spokeswoman confirmed this but did not provide any detail.

According to Storm's financial accounts for the year to June 30, the financial adviser had loans totalling $37.5 million with Commonwealth Bank and Macquarie, including more than $26 million of margin loans.

It is not known if the margin loans relate to the company's own investment trading or that of its founders, Emmanuel and Julie Cassimatis. The Macquarie loan was personally guaranteed by the two founders.

Administrators were appointed by Storm Financial directors last Friday, with Mr Cassimatis blaming Commonwealth Bank's demand for a loan repayment.

Storm now faces the same predicament as its clients. They were sold into hundreds of millions of dollars worth of highly leveraged sharemarket investments by the company and now face ruin.

The Australian Securities and Investments Commission started investigating the company last month after 450 client accounts deteriorated to the extent they owed margin lenders $30 million. In effect, their investments had fallen below what their margin loans were worth.

Law firms, including Slater & Gordon, are considering a class action against Storm Financial and loan providers.

© 2009 Sydney Morning Herald

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