There is certain level of duty of care the lender has to exercise, he cannot be negligent and blatant in lending. All banks have established lending policies and to deviate from policy you need to have strong arguments. Let me elaborate:
- Concentration risk Lending of this nature should have clearly specified maximum exposure to one borrower. It must have been capped at some % level to borrowing. I would assume max of 5% to be the case. This does not appears to be case given large losses from a minority.
Bank policy would generally spell out the maximum concentration for the lend. Wonder where ANZ stands on this.
- Mark to Market Clearly, the banks should have had systems in place to monitor online. Surely when 200 mil or 10 of total asset book goes missing there should have been some level of checks and balances in place. What happened to all of this? Does this mean that ANZ/ML are not able to effectively monitor their loans.... in which case monies deposited with ANZ is clearly at risk. A bit of a speculative assumption but I hope you get my drift.
This onna get worse before it gets better. We have got to stand-up NOW for own sake. C'mon guys do not give-up, we are the good guys here the baddies are trying to eat us up.
