Macquarie Can't Find Storm Shelter

MACQUARIE Group remains exposed to an unknown quantity of margin loans, despite selling its margin loan portfolio to Bendigo and Adelaide Bank.

This includes a $10 million exposure to the Storm Financial collapse, which was one of a number of accounts deemed too risky by Bendigo.

"We looked at Macquarie's lending book and acquired those parts which matched our own risk appetite," Bendigo spokesman Will Rayner said yesterday.

A Macquarie spokeswoman confirmed this but did not provide any detail.

According to Storm's financial accounts for the year to June 30, 2008, the financial adviser had loans totalling $37.5 million with Commonwealth Bank and Macquarie, including more than $26 million in margin loans.

It is not known if the margin loans relate to the company's own investment trading or that of its founders, Emmanuel and Julie Cassimatis. The Macquarie loan was personally guaranteed by the two founders.

Administrators were appointed by Storm Financial directors last Friday, with Mr Cassimatis blaming Commonwealth Bank's demand for a loan repayment.

Storm now faces the same predicament as its clients, who were sold into hundreds of millions of dollars worth of highly leveraged sharemarket investments by the company and now face ruin.

The Australian Securities and Investments Commission started investigating the company last month after 450 client accounts deteriorated to the extent they owed margin lenders $30 million. In effect, their investments had fallen below the value of their margin loans.

Law firms, including Slater & Gordon, are investigating a potential class action against Storm Financial and the banks that provided the margin loans to clients.