Bank of Queensland’s profits will be hit by more than $22 million after it reached a settlement with ASIC over the Storm Financial collapse.
The bank announced yesterday that it had resolved both of its outstanding Storm Financial proceedings, subject to Federal Court approval.
The two proceedings are ASIC’s unregistered managed investment scheme proceedings, which started in December 2010, and a class action, which started in December 2012.
Storm Financial was a financial advice company that entered administration in 2009.
ASIC has been investigating a range of issues relating to the affairs of Storm Financial, including investment home lending, margin lending and related advice. The investigation started in December 2008 and is ongoing.
ASIC said the agreement with Bank of Queensland concludes its existing litigation to obtain compensation for Storm investors, following a payment of up to $136 million by Commonwealth Bank and a payment of $75 million by Macquarie Bank.
Bank of Queensland said it would make a gross payment of $19.7 million to settle ASIC’s proceedings and the class action, with $17 million of that to be paid to its customers.
The net impact after tax will be $22.1 million, which includes all legal costs and an additional provision for remediation costs.
These payments will be reflected in Bank of Queensland’s 2013/2014 results, which will be released on October 9.
ASIC said the Bank of Queensland settlement would return about 45 cents in the dollar to each investor or investor group involved in the deal.
The settlement agreement includes acknowledgement by all parties that Bank of Queensland denies any wrongdoing in relation to both proceedings.
Acting chief executive Jon Sutton said the bank was pleased to have resolved the long-running issue and would now work towards providing certainty to the customers who were involved.
“We have worked closely with Storm customers over the last five years and will continue to consider their individual circumstances,” he said.
“Eligible customers will be contacted by the class action lawyers in the coming months and will have the option of accepting a settlement payment or staying on their existing repayment arrangements.”