Bankwest charged $1m exit fee to hotel it told to go elsewhere

Bankwest told a hotel group to take its business elsewhere, but still charged it a fee of almost $1 million to leave, the banking royal commission has heard.

Michael Doherty's hotel group undertook a $60 million project around Hobart's historic Hadleys Hotel, which included building a new hotel on an adjoining site.

But by the time the new hotel was ready to open, the bank was moving to appoint receivers to the project.

Mr Doherty said after a 2011 valuation, Bankwest told Dohertys Hotels it no longer wanted it as a client and it would have to refinance the loan elsewhere.

"We were told ... Bankwest no longer had an appetite for this sort of development, especially in Tasmania," Mr Doherty told the royal commission in Melbourne on Tuesday.

Mr Doherty said the bank later maintained the group would still have to pay a $980,000 "break fee" to leave.

"We said, 'you are forcing us out and we have got to pay $980,000 as a break fee and that is just making the refinancing impossible'."

The group, which was also being chased over a tax debt, was unable to find other finance.

Bankwest appointed receivers in February 2012.

Hadleys, the hotel and other properties used to secure the Bankwest facility, were later sold.

Mr Doherty said he and the other guarantors ended up bankrupt and lost their homes.

The inquiry heard Bankwest suffered a significant loss on the Dohertys file in the order of $38 million.

Other former Bankwest customers have given evidence about the bank changing loan terms after the Commonwealth Bank's $2.1 billion acquisition in 2008, amid the global financial crisis.