The financial press have been repeatedly telling us in recent weeks that the Commonwealth Bank is taking the hardest line with struggling corporate clients.

Just this week it was the Commonwealth Bank which put the cleaners through Townsville-based Storm Financial, as Fairfax’s Michael West reported yesterday.

The broader Centro shopping centre empire is still carrying about $15 billion in debt and faces a crucial debt refinancing deadline on Monday. Could it become Australia’s biggest corporate collapse? This is what The AFR reported on Tuesday: “As the deadline looms, speculation has increased that Commonwealth Bank of Australia, which has the largest secured facility to Centro among the Australian syndicate, is proving the most reluctant.”

The problem with CBA playing bad cop against Centro is that it was also the largest investor in the two ASX-listed Centro vehicles through its funds management business. It was the same at Storm Financial — CBA was simultaneously the biggest lender and distributor of its funds management products.

In a global environment where lenders are regularly smashing equity, this represents a huge conflict of interest when the same financial conglomerate is on both sides.

What still hasn’t been reported anywhere in the financial press is that CBA CEO Ralph Norris opened up about the Centro conflicts at the AGM on November 13.

You can listen to the audio file or read the transcript.

When Centro imploded on 17 December last year, CBA had debt exposure of more than $1 billion and equity investments in Centro Retail and Centro Properties group worth $828 million.

CBA subsequently sprinted for the equity exit, but its clients still dropped well over $500 million. Now it appears determined to destroy any last remaining Centro equity in its role as lead intransigent banker.

Opposition leader Malcolm Turnbull was absolutely right in these comments to the Press Club last month: “All too often senior lenders take the approach of breaking up and selling businesses for whatever they can get, so long as it is enough to cover their debt, with no regard to the interests of unsecured creditors, shareholders and employees.”

Australia’s banking conglomerates have way too much power and they are brutally exercising it right now.

Alan Kohler ripped into ANZ on Business Spectator this week with a piece that opened as follows:

ANZ Bank and Merrill Lynch are inflicting the most appalling legalised cruelty upon the unfortunate souls who chose Opes Prime as their stockbroker. They are, in effect, issuing a $258 million retrospective margin call on stocks that were sold more than six months ago.

It’s time the banks were called to account. If Commonwealth Bank pulls the plug on Centro next Monday, I’m going to run for their board next year on a platform that they stop being the most brutally unsympathetic bank in the distressed Australian market.

As Crikey‘s Andrew Crook reported on 3 December, CEO Ralph Norris is shooting for an $11.56 million bonus if CBA is rated number one for customer service by June 2010.

It’s all very well improving service for existing retail customers, but Norris should also be showing a bit of sympathy for his biggest customers when they hit troubled times during the worst credit crisis since the great depression.

Disclosure: After 435 million votes in favour at the recent Centro Retail AGM, the author is expecting to be appointed to the board if the banks roll the debt.