Tick, tick, tick, tick, tick…

Keep your eyes peeled on announcements from Centro Properties Group this afternoon as the 5pm refinancing deadline approaches.

The Age led its business section today with a story headlined “Bankers poised to back Centro”.

Alas, Centro Properties Group and Centro Retail have since entered a trading halt, with announcements expected later today or tomorrow.

If the deal was signed, it would have been announced so it looks like Centro remains on a knife edge.

The Australian‘s Matthew Stevens threw a spanner in the works on Saturday with this extraordinary column naming Commonwealth Bank credit boss Ross Griffiths as the “corporate hitman” who is threatening to pull the rug on Centro, having already caused mayhem at Allco Finance Group and Oz Minerals.

Stevens claimed that 22 of the 23 Centro financiers have signed up to a rollover with CommBank the only hold-out courtesy of Griffiths’ intransigence.

Whilst some of the Stevens rhetoric was over the top — “Griffiths is a bloke who could, almost single-handed, dramatically amplify the recession we are about to have” — he won support from Alan Kohler who also went strongly into bat for the rollover on Business Spectator this morning.

Without naming Griffiths, Kohler’s column was headlined “Bank suicide bombers” and included the following:

“Commonwealth Bank is apparently holding out — threatening to bring the whole thing down, which would devastate Australia’s retail sector and eventually lead to a big increase in unemployment.”

This line is equally over top. If Centro collapses, its shopping centres will continue to operate because the vast majority are profitable. The problem is servicing that monster $15 billion debt.

It will just be bank-appointed receivers calling the shots rather than the Centro boards and management teams.

That said, it does seem ridiculous that Commonwealth Bank is benefitting from the government guarantee whilst simultaneously showing no sympathy for struggling corporate customers, even though CEO Ralph Norris is chasing an $11.56 million bonus if he can get CBA to number one for customer service by June 2010.

With politicians, clients and the media all rounding on CommBank, it surely wouldn’t be stupid enough to go ahead and pull the plug on Centro as a renegade lender.

The AFR reported on Saturday that BHP Billiton is tipped to buy the Prominent Hill copper-gold mine in South Australia from Oz Minerals given the synergies that would come from its nearby Olympic Dam facility.

This throws up a fascinating conflict of interest given that ComBank is causing much of the Oz Minerals distress and its chairman John Schubert also happens to be next in line to assume the chair at BHP-Billiton. Given that Schubert has clearly failed to intervene and rein in Ross Griffiths, this is not a good look.

CommBank was once again the worst performed ‘Big Four’ bank on the market this morning and it is getting very close to slipping back into third place behind NAB in terms of market capitalisation. With Westpac the new number one, maybe CBA should study its more considered approach to both risk management and corporate workouts.

*Watch this video clip from Friday’s final 2009 Business View on Sky News Business calling for banks to get out of the funds management industry to avoid future situations like CBA’s huge Centro conflict of interest.

Peter Fray

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