A bank that was valued at $20 billion and that was bailed out by the government has been forced to close after it collapsed in a matter of days.
The Southern Cross Bank in Melbourne, which had been valued at around $1.5 billion, went bust in just days after being purchased by the Commonwealth Bank.
It collapsed as its assets were taken by the Government.
The bank had previously been valued as high as $1 billion and was valued by the Australian Securities Exchange at $1,700 per share.
The collapse in the bank was the latest chapter in a troubled history of the Commonwealth and Australian banking.
It was previously sold to a group of Asian banks, including China-based State Grid and the State Bank of India.
The Government sold the Commonwealth to the Asian bank in a $8 billion deal in March 2016.
“There were concerns that the Commonwealth would not survive,” a Commonwealth Bank spokeswoman said in a statement.
“However, as the Commonwealth became the Government’s second largest shareholder, Commonwealth Bank was able to realise its value through an appropriate combination of public-private sector and private-sector investments.”
At the time, the Commonwealth said the sale was expected to boost the bank’s profits.
“While it is too early to determine the full impact of the sale, we have seen strong performance from Commonwealth Bank’s businesses and we are confident the bank can continue to achieve strong returns for shareholders and investors,” a spokeswoman said.
“It is vital that Commonwealth Bank continue to provide safe and stable banking and financial services to its customers, and the Government has been clear that the future of the bank should not be dictated by any political or financial interest.”
The collapse of the Northern Cross Bank is a far cry from the financial crisis of 2008-09, which saw the collapse of several Australian banks, as well as the collapse in global markets.
The Northern Cross, which was valued between $500 million and $1 million, collapsed just days before it was due to close.