Westpac Not First Loan Choice
Sydney Morning Herald
Thursday September 14, 1995
The former Westpac foreign currency loan borrower, suing the bank for $80 million in damages over alleged negligent advice and mismanagement of the loan, yesterday told the Federal Court he had made a number of loan applications in 1984 before he spoke to Westpac about obtaining a $13 million Swiss franc loan.
Mr Bob Porter, a director of the borrower, Drambo Pty Ltd, under cross-examination by Westpac counsel, Mr Richard Chesterman, QC, said his Whitsunday resort had hit financial difficulties by early 1984, was capitalising his interest and that his then banker, Tricontinental, was pressing him to refinance.
Throughout the year, Mr Porter said he looked at a number of refinancing proposals, some of which included a foreign currency segment, put forward by Tricontinental, Citibank, Asian European Bank and Australian International Finance Corporation.
However, these offers and applications either lapsed, were not approved by the lender or were not proceeded with by Drambo.
In October of that year Mr Porter said he spoke to an old friend and Brisbane Westpac manager, Mr Noel Osborne,about the bank matching Citibank's loan offer.
The court was told that some of the 1984 loan offers were couched in terms where a larger loan than required was applied for and some of the loan money placed on deposit in Australia, with the interest earned on deposit at local interest rates neutralising or offsetting the cost of the Swiss franc loan. Such deposits could earn about 19 per cent on deposit while the Swiss franc loan interest component was 6 per cent.
Mr Porter said that while he had several discussions with bankers, his accountant and his solicitor about the loan offers, he never really understood or asked how they worked or what the risks were.
Mr Porter said he was impressed by Westpac's record and its claimed expertise in offshore borrowing.
© 1995 Sydney Morning Herald
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