THE Reserve Bank had $55 billion deployed helping Australian banks with liquidity when the Commonwealth Bank swallowed BankWest in December 2008.

A spokesman for the RBA declined yesterday to confirm if BankWest had been a recipient of this cash. It was not the central bank’s policy to detail the identity of the individual banks which used “repurchase agreement” facilities to swap their assets for cash.

BusinessDay revealed on Monday $3.752 billion in cash payments to BankWest as the lender struggled to source funding for its loan book during the financial crisis in 2008.

The payments were made between August and December, either by other financial institutions or, as appears more logical, by the RBA.

The sheer size of the liquidity injections for Australian banks generally in 2008 puts paid to banking lobby claims that the government did not assist them with cash but only with guarantees.

All these “repo agreements” during that year were made on the terms stipulated by the central bank – which entailed the banks pledging other assets as collateral in return for the cash. Despite the pledges, the facilities had been loosened and extended that year to reflect the emergency conditions on global markets.

Meanwhile, a former employee of BankWest who worked there during the heady period of 2008 said there was no doubt the bank held significant subprime loans as a result of its rapid expansion on the east coast before the global financial crisis. Nonetheless he said many loans had been unfairly called in and there was a pattern of aggressive foreclosures which reflected the policy of the new owners CBA to reduce exposure as they could call on a warranty from BankWest parent HBOS to be compensated, and did.

Details of this warranty are being sought by a range of borrowers whose loans were called in during 2009, particularly east coast property developers.

Unhappy Banking, the action group of these disaffected former clients of BankWest, now speaks for about 300 members with borrowings of about $1 billion. They are calling for a Senate inquiry into the matter.

BankWest responded to questions about the warranty and the potential group action yesterday, an action which litigation funder IMF Australia has under consideration.

“The terms of the sale [to CBA] had no impact on the bank’s approach to its business-lending customers and we strongly deny the speculation that the sale agreement encouraged the bank to deal unfairly with customers,” said a statement from a spokeswoman.

“Any subsequent events or actions taken by BankWest were not relevant to the purchase price.”