Banking royal commission: CBA’s David Cohen a likely highlight

Expect to hear some gory details when CBA chief risk officer David Cohen faces banking royal commission lawyers.

CBA chief risk officer David Cohen, centre.

For royal commission aficionados, the looming confrontation between Commonwealth Bank chief risk officer David Cohen and one of the two senior counsel assisting will be a highlight.

The word on the street is that Cohen, formerly CBA’s group counsel, will be invited into the witness box tomorrow, after the completion of three case studies.

All three were part of CBA’s controversial Project Magellan — a deep dive into 1104 Bankwest commercial loans that kicked off in April 2010.

The project was commissioned because provisions kept piling up after CBA’s $2.1 billion acquisition of Bankwest in late 2008, around the peak of the financial crisis.

Expect to hear a lot of gory details about the treatment of the Bankwest customers.

Cohen will provide a broad overview, with CBA’s general manager of restructuring for credit management Brett Perry, as well as chief credit officer Peter Clark, expected to be across the detail of the individual case studies.

While the purpose of Project Magellan was to enable CBA to make appropriate provisions for the Bankwest commercial lending portfolio, it’s the aggressive way the bank went about it that will concern the commission.

In broad numbers, 161 of the files were transferred to the bank’s workout area because they were troubled or in arrears.

Of those, 31 were restored to performing status, continuing on the same terms as they were prior to the review.

A further 93 loans were refinanced on different terms, while 37 were terminated due to customer defaults.

CBA is likely to again rebut concerns about engineered, non-monetary defaults by highlighting that 33 of the 37 terminated files had a monetary breach of the loan agreement.