BENDIGO and Adelaide Bank has begun suing a select group of Great Southern investors who are refusing to repay loans in a move which raises the stakes in the bank's battle to recover the $510 million it is owed.
According to The Australian Financial Review, a writ filed in the Victorian Supreme Court also reveals the penalty interest rate Great Southern investors are being charged for investing in the company's managed investment schemes - 11.5 per cent per annum, increasing to 14.5pc on any repayments that are overdue.
Great Southern was Australia's largest agribusiness before it collapsed last May. Bendigo Bank financed more than 8000 investors in the company's various timber, wine, cattle and almond schemes. Projected returns promised to investors are unlikely to be met and the bank is now engaged in a tense stand-off with many investors who refuse to repay their loans.
The exposure has weighed heavily on Bendigo's share price, the worst performer of the entire banking sector in calendar 2009. Chief executive officer Mike Hirst has pledged to pursue defaulting investors to bankruptcy and in December the bank began that process by suing three investors: Anthony John Freestone, Peter Jamieson Kumnick and Gregory Powell Smith.
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