Storm warnings for Macquarie and BOQ

Macquarie Bank allowed Bendigo and Adelaide Bank to cherry pick the margin loan book that the former plans to sell to the latter, leaving Macquarie with some residual exposure to the margin lending segment, the Sydney Morning Herald reported.

While the $1.5 billion of margin loans Bendigo picked up from Macquarie probably reflects practically all the latter's margin loans, Macquarie may have retained loans of lesser quality.

That includes $10 million of loans in relation to clients of Storm Financial, the financial planning group that appointed administrators on Monday.

The Sydney Morning Herald separately reported some awkward bank lending practices in relation to clients of Storm, which often recommended very high leverage to its clients, with the equity component of margin loans funded by loans over other assets such as houses.

The SMH featured one hard-luck story for a Vietnam war veteran and disability pensioner who somehow obtained a $420,000 loan from Bank of Queensland on what the newspaper implies was a fraudulently prepared loan application, though whether it was Storm or its agents or BOQ or its agents or the chap now likely to lose his home to the bank isn't made clear.