CBA not out of the Storm yet
Commonwealth Bank has finally got the result it wanted when, in 2009, it entered into mediation with customers who borrowed money to invest with Storm Financial. The corporate watchdog has dropped its case against the bank over the matter.However, the bank still faces a class action organised by law firm Levitt Robinson.The bank announced on Friday that it had reached a resolution with the Australian Securities and Investments Commission in relation to Storm.The bank will make A$136 million available to customers who invested through Storm. The total of payments to customers, including payments already made and the new funding agreed on Friday, is around $270 million.Bank customers who had already received compensation through the mediation scheme may receive additional funds under the new scheme.The bank has also agreed that if, after compensation is applied to an investor's Storm-related loan, the investor is still in negative equity, the balance of the loan will be written off.Also, an investor granted a moratorium on interest payments by CBA will have the interest written off.Commonwealth was the only one of the three banks involved with the Storm failure to enter into mediation. The others were Macquarie Group and Bank of Queensland.In November 2010, ASIC commenced court proceedings against CBA, Bank of Queensland and Macquarie Group over their involvement with Storm.Subject to the Federal Court dismissing ASIC's action, the agreement ends ASIC's proceedings against CBA.ASIC said in a statement that it would continue with its action against Storm's directors, Macquarie Group and Bank of Queensland.The trial on these matters, which may last until the end of the year, kicks off in the Federal Court in Brisbane today.