Banks closely monitoring costs with Centro

Centro, with its incredible loss, has bankers peering over their shoulder, counting costs. Insolvency group hired to investigate.

The three largest Australian lenders hired insolvency group McGrath Nichol to investigate the fallen Centro Property Group. The goal of hiring such a firm is to fully understand the situation within Centro as well as what is being done to save the future of the company.

The largest of these banks, in terms of exposure to the unsecured loans Centro is struggling with is ANX. IT has some $500 million in unsecured loans tied up there. Loans to the group equal about $1.2 billion. Additionally, CBA has about the same in loans to the group and an additional $300 million in unsecured loans. The final bank, NAB has some $1.1 billion in loans with $350 million in unsecured loans through Centro.

Making the process difficult is the complicated structure of Centro, which is also complicating the process of selling parts of the company off.

In trading news with Centro Properties Group, the news was no better. Centro scrip dropped 22.52 per cent in trading on Thursday. It dropped to 86. In the process, the drop cost the company some $210 million worth of equity.

The difficult drop came as news reports filtered that Centro was being monitored by corporate watchdogs.

The Australian Securities Exchange also reported that the Swiss bank, UBS, dropped it shares of Centro a significant level, in order to fall below the threshold of significant shareholder. They now own less than 5 per cent. This allows UBS to sell some or all of its Centro holdings without alerting the market.