Banks ask clients to take on NSW Pub debt

Three of the nation's top banks are approaching their wealthiest individual clients in an attempt to offload part of their $5 billion exposure to the ailing NSW pubs sector, which is struggling to repay loans amid one of the worst downturns in decades. The move is unprecedented, with pub industry sources saying the banks have never before resorted to these measures. By asking their private banking clients to take over the pub debts, ANZ, National Australia Bank and Westpac are trying to stem losses without revealing to the market the hit they are taking. If forced into selling them on-market, the lower sale prices would set a worrying industry benchmark. But the banks are willing to sell the assets cheaply if it means they can reduce their exposure quietly and without the hassle of receivership. Pub valuations have fallen 17per cent in the past year, but if they went to market today they would be down 30 per cent, property industry sources say. Credit has dried up and banks are asking investors to contribute half the purchase price on hotels. The list of pubs offered to the bank's wealthy clients includes some of the estimated 200 of 1984 hotels state-wide already in breach of their banking covenants. This list is set to grow as conditions are expected to worsen next month following the end of the summer holiday season. The Age (Melbourne), January 19.