Rabobank has admitted it was unfair to lend money to a couple to expand their Queensland cattle farm when they could not make the payments.
Wendy and Adrian Brauer took up their bank manager's proposal to buy another property near their existing cattle farm, leasing out the two properties while they were temporarily living in the US.
After the banking royal commission investigated the Brauers' case, Rabobank conceded it was unfair and amounted to misconduct by breaching a banking code requirement to act fairly and reasonably.
Rabobank's southern Queensland regional manager Bradley James said the Brauers would not have been able to service the interest on the loan under the proposal.
The inquiry heard the Brauers were only leasing the properties until they returned home and could fully stock the farms with cattle.
Mr James said even if they were able to use their own financial resources to build up cattle numbers, the facility still could not have been serviced.
Therefore the bank's conduct in approving the loan without telling the Brauers it could not be serviced if they ran both properties fell below community standards and expectations, he said.
The inquiry heard the Brauers quickly had difficulties servicing the loan.
The bank manager had a conflict with the 2009 sale as he represented both the Brauers and the seller, while the family proposing to buy another section of 'Jamberoo' were prospective Rabobank customers.
He also conducted the property valuations.
Mr James said the manager resigned from Rabobank in 2014, at a time when he was being counselled and on a performance improvement plan as he was not meeting his lending targets.
The Brauers had expected to be able to be able to access $300,000 from the bank to go towards stocking both properties with cattle when they returned to Australia in March 2011.
But to get those funds they were forced to agree to repay $3 million within two years, Mrs Brauer told the commission.
Mr James said the bank's conduct in not meeting the Brauers' expectation that they could access the $300,000 on their return was unfair and also amounted to misconduct.
Mrs Brauer said the Jamberoo deal ultimately came at great financial and emotional cost, estimating her family was left $1 million in the red.
Mr James said Rabobank had not considered paying compensation to the Brauers.
"I think it's something that should be done without the public gaze," he told the commission on Thursday.
"I think it's something we will quietly consider."
