| 18.11,11. 12:09 PM |
Banks put the bounce on bad pubs
November 18, 2011
PUBS shamed under the new "three strikes and you're out" legislation could have bank loans withdrawn on the spot - even after the first offence.
Banks are also considering appointing their own managers at unruly pubs under tough new lending rules to shield themselves from losses caused by the state government crackdown.
Under the new rules due to become law before the end of the year, "rogue" hotels will be named and shamed on a public register maintained by the Office of Liquor, Gaming and Racing. Pubs caught three times in less than three years could have their licences cancelled, slashing their value.
The National Australia and Commonwealth banks want to bolster their ability to foreclose on hotels where revenues slump because of new laws. Some banks have drafted a new clause that could be inserted into agreements given to hotels taking out new loans or rolling over old loans.
The clause will allow them to call in loans to pubs where a serious offence is proven.
Most hotel loans are rolled over every three years, with some every year or every six months. Banks are also expected to insist pub owners notify them immediately if the pub receives a strike.
Strikes can occur for incidents such as selling alcohol to patrons who are drunk or underage, allowing violent behaviour or drug pushing, or for selling drinks beyond their trading hours.
Strikes last for three years before they expire.
Taylor Woodings, an insolvency firm specialising in hotels, yesterday sent out an alert about the potential dangers of the legislative changes to its customers - many of whom are major banks.
In 2009, the owner of four hotels that had been punished for liquor licence breaches with a 2am "lockout" went bust owing more than $100 million to the banks.
NAB spokeswoman Elisha Vincent said the bank had "no immediate plans" to tighten lending criteria to hotels and refused to rule out changes to loans once the legislation passes. She said: "We have a responsibility to review risk appetite parameters."
A Commonwealth spokeswoman said the bank could "impose conditions of funding for loans" on individual hoteliers but said there was no across-the-board change to its commercial lending terms in response to the legislation.
Westpac said "we have no plans to change our policy" and ANZ was not looking to tighten its lending to hotels.