Commonwealth Bank is selling an additional A$357 million of stock at A$28.37 apiece.

Commonwealth Bank of Australia, the nation’s biggest mortgage lender, was forced to sell shares at a steeper discount than planned after blaming Merrill Lynch & Co. for failing to tell investors about an increase in bad debts.

The Sydney-based lender turned to UBS AG to arrange the A$2 billion ($1.4 billion) sale, with A$1.65 billion selling for A$26 a share, it said in a statement. Commonwealth said it terminated an earlier agreement to sell the shares at A$27 via Merrill Lynch after the New York-based bank “did not inform potential investors of the various disclosures made by the Bank.”

“I’m unhappy that it happened but I’m still reserving judgment on who’s to blame,” said Peter Vann, who manages more than $600 million, including Commonwealth shares, at Constellation Capital Management Ltd. “Commonwealth hasn’t provisioned enough for their bad debts and among the big four banks they are in the bottom tier.”

 

Constellation was among investors approached by both Merrill and UBS for the sale, and declined to participate, he said.

Commonwealth Bank is selling an additional A$357 million of stock at A$28.37 apiece. The bank’s shares were halted from trading on the Australian stock exchange today. They last traded at A$29.15, having fallen 51 percent this year.

“Merrill Lynch was required to provide full disclosure to all potential investors before investors were required to commit,” Commonwealth said today in a statement.