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Doing what banks do
John Parkes
25 Jul 2009 11:30 AM
I didn't get caught in the Opes Prime mess so perhaps I'm not a good judge of the matter, but I still want to know what ANZ and Merrill Lynch did wrong. They were approached by people who wanted to borrow money to buy shares. Shares I might add that in many cases most investors would see as highly speculative and dangerous to be investing in large quantities. They leant money, accepting, usually, shares as security for the loan. That is a perfectly normal transaction. It was little more than a margin loan, except you usually can't get those for some of the iffy companies which were invested in.
Opes Prime collapsed for a number of reasons none caused by the two lenders. The security for the unpaid loans was taken by the lenders. So what? That's normal as well. The people who signed over their shares to ANZ did so on a clearly worded off market transfer form. I suspect that like most borrowers these people were so keen to get their hands on ANZ's money they didn't read what they signed - we have all done that.
I suspect those same borrowers, were they ANZ shareholders, would be the first to object had ANZ made loans to the Opes Prime customers without getting any security, so I ask again, just what, apart from being a big bank, and thus having a terrible public relations situation, did ANZ do wrong?
And a final point, huge as the settlement may be, I suspect that to ANZ it is simply a risk management decision to control the potential total cost of fighting, and perhaps losing, the legal battles. Perhaps the creditors blinked too soon, and had they the courage of their convictions could have got far more in compensation.
Will they use their winnings from ANZ to fund claims against the financial advisors who were paid to advise them in the direction of Opes Prime? When will the industry be cleaned up so as to get rid of these "all care – no responsibility" leeches?
Busy doing other things
Veronica Nicholls
4 May 2009 5:46 PM
Andrew Jones (The hollow men, Conversation contribution, May 4): The ACCC is far too busy making life hell for Telstra.
Go for ANZ's throat
Joshua
4 May 2009 3:41 PM
It is not revenge it is justice people are seeking. (See The cost of kicking ANZ, May 4.)
I agree with you about revenge, I certainly do not agree with you about seeking justice. I hope Opes Prime victims go for ANZ's throat. Remember this recession has been caused by greedy banks not lending and what you are advocating to let them get away with this massive mess. Wrong wrong wrong!
The hollow men
Andrew Jones
4 May 2009 10:05 AM
Alan Kohler,
While I agree with your sentiment that proceeding with litigation would only claim a hollow victory for the creditors, surely the fact that claims of 'unconscionable conduct' and being knowingly involved in breaching fiduciary duty should allow a federal body like the ACCC or ASIC to begin legal proceedings against ANZ. (See The cost of kicking ANZ, May 4.)
It seems that once again the mighty dollar is more important than the law and that the creditors are left with the decision of how to proceed.
Put you guns away boys
Don Gilbert
6 Mar 2009 10:15 PM
Vianale & Vianale LLP can stand on the highest building in Florida and jump up and down as much as they like. (See US class action against ANZ over Opes, March 6.)
Compared to a direct claim such as the Opes Prime clients had, a claim proving that Opes Prime inflated the ANZ share price is too remote and too difficult to prove. Also the market has been too volatile. Put your six shooters back in your holsters and find a softer target elsewhere.
Wrong precedent
Don Gilbert
6 Mar 2009 2:44 PM
Regarding the Opes deal: That is not an offer. We will only settle the dispute if ASIC agrees not to pursue – that is a threat!
ASIC should not be bullied or threatened and it should not become precedent for more alternative dispute resolution settlements of commercial disputes!
Hocus Opes
Ernest Everett
21 Jan 2009 3:47 PM
Robert Gottliebsen, do we really think that all those clients of Opes Prime had no idea that their title belonged to ANZ. Was there anybody else (other than O.P.) who would have lent on those shares?
No class
Neil Campbell
12 Dec 2008 9:27 AM
Mr Kohler, I like your views, including the ABC's Inside Business.
If IMF is funding the class actions against ANZ, then they must have a reasonable view of success. If Ferrier Hodgson takes ANZ on, conservative accountants must also have reasonable attitude toward success. And if they are successful, which of the 4 Pillars will be the white night?
Along with heaps of ANZ mortgages that are likely to default, and exposure to companies likely to default, and not an awful lot of capital to write the losses off against, I would be very loathe to lend my money to the ANZ. (See Scrooge McANZ, December 10)
No afterglow
Scott
11 Dec 2008 4:27 PM
Fair comments by all who have contributed, however, as a risk manager I believe the ANZ reputation damage will be significant and would mean many a punter or corporate would think twice about getting into bed with them.
Risk and reward
John Doe
11 Dec 2008 3:52 PM
You are presenting one side to story that is unhappy for all involved – and you make it sound a million times worse as it is "a week before christmas". Give me a break. (See Scrooge McANZ, December 10.) These were business people that you advise 'went for high return, high risk species'. As speculators they knew the risks and should have been prepared to lose all.
Time for a perp-walk
Alan Anderson
11 Dec 2008 3:29 PM
In response to Phillip Amery regarding Opes and ANZ and "ruined reputations" (see Ruined reputations, Conversation contribution, December 11): Until all the facts are known, expressions of concern are potentially misplaced. Whether we will get all the facts is to be determined. By the time it gets through the system in 10 years, any lessons will be lost.
Opes Prime has been out of the hands of the directors of the company, and in the hands of ASIC, administrators, the courts, Justice Finkelstein, mediation, receivers, and liquidators since the February 2008. Yet, to date it is still not even known whether Opes Prime was in fact insolvent as at January 2008. I would like to see the introduction of the perp-walk like they have in the United States. Remember Ken Lay and Enron. It's quick and clean. Meanwhile the three designers of this life-altering disaster are invisible. The employees of ANZ who were co-enablers have quietly disappeared.
Bad bedfellows
Chris Wheeler
11 Dec 2008 2:37 PM
ANZ and Merrill have an obligation to their owners to collect. Tough luck Opes Prime clients you just should have looked at who was in the bed before you jumped in. Most of them are probably sophisticated, wealthy investors who are looking at any excuse to extract themselves from an unpleasant situation.
Whipping boy
John Parkes
11 Dec 2008 2:18 PM
I know I am probably in a minority of one when I ask this, but why is ANZ Bank being made the whipping boy in all this?
As best I can see ANZ was approached by a potential borrower, Opes Prime, who wanted to borrow money and offered security in the form of shares. I think that when the loan was not repaid the security was seized and sold, and it was enough, or close to enough, to cover the amount owing at the time by Opes Prime. There is some suggestion that ANZ's back office made some mistakes and some of the documentation was questionable but that doesn't relate to the original loan application or its safety from ANZ's point of view.
Now I know there is good reason to think that the security offered to ANZ by Opes Prime may be subject to some dispute as some of Opes Prime's clients may have misunderstood just what they were signing. However many of those clients would, in other circumstances, pass the test to be "sophisticated" investors so one has to wonder whether they really signed in hubris that the share market boom couldn't stop so it didn't matter what they signed. That is hardly the fault of ANZ Bank. Why should ANZ be criticised for doing business with someone whose own clients were less than smart and are now paying for their lack of caution?
Pushed to the margins
Jason Goldsmith
11 Dec 2008 1:01 PM
This is a truly disgusting episode in Australian business history. (See Scrooge McANZ, December 10.) This litigation will go for years and adding the margin call is clearly an attempt to ensure that the battle is an uneven one. I for one, will never deal with the ANZ or Deloittes and see this as the only method of approach. People often wonder why the youth of today are enthusiastic about seeing the monetary system collapse. This is why. Unfair, questionably legal but certainly immoral and unethical.
Ruined reputations
Philip Amery, financial planner
11 Dec 2008 10:40 AM
As someone who has no exposure to Opes, but who has seen the effect on people who have, I cannot understand the behaviour of Merrills and ANZ. How can that act publicly with so little regard for their corporate reputations?
Don't they realise there are literally thousands of often well-connected, financially active people out there who will advocate against these organisations for the rest of their lives?
Has anyone ever quantified the damage Westpac brought upon themselves through the Swiss loans affair?
Obviously these institutions would have received advice that pursuit of claims is valuable to further their commercial position, but one would expect senior management to be able to take a more holistic view.
In situations like this there it is never possible for the net return from legal action to exceed the tangible and intangible costs of taking such a course. By now every spare conference room on the east coast should be humming with low-cost mediations and the banks should be saving their lawyers for the administrators.
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