An ANZ executive says he feels sad and struggles to understand the bank's refusal to let a struggling Victorian farming family keep their homes.
ANZ admits it should have shown more empathy for former Landmark Financial Services customers facing hard times, after it bought the Landmark agribusiness loan book in 2010.
Third and fourth generation farmers Arthur and Rhonda Cheesman and their son Reuben and his wife Katrina agreed to sell assets when they hit financial difficulties.
But the bank rejected their repeated pleas to be allowed to keep their homes on the farms in western Victoria and the equipment and machinery so they could earn a living.
"Our clients are merely making this request so they may have the chance to retain their home and livelihood," the Cheesmans' accountant wrote in 2012.
ANZ rejected the proposal, with a manager noting "we should be firm here".
ANZ's head of lending services for corporate and commercial Ben Steinberg told the banking royal commission the case made for difficult reading.
"Looking back on it and the events that you've just described, I find it sad that that happened," Mr Steinberg told a Brisbane hearing on Tuesday.
"I'm struggling with it.
"If this was done today it would be dealt with in a different way."
Mr Steinberg said ANZ would show more empathy towards its agribusiness customers today.
The commission heard ANZ repeatedly rejected reasonable offers from the Cheesmans to settle their remaining debt as it thought it could get more money by forcing a property sale.
ANZ acknowledged it should have been more responsive and empathetic to some former Landmark customers facing hard times and that its failure to do so caused distress in some cases.
Queensland grazier Charlie Phillott and his son took their story to the media after being forced off their Carisbrooke Station, and the bank apologised and returned control of the farm to the family.
Mr Steinberg said the bank did not work constructively with Charles Phillott Junior after the Landmark acquisition to solve his financial difficulties.
"We issued a notice on our customer effectively terminating the facilities and requesting repayment of them."
He said the bank did not act fairly and reasonably.
Asked by commissioner Kenneth Hayne QC if the bank acted in an ethical manner, Mr Steinberg said: "I think's it's fair to say we didn't."
The response was met with applause from members of the public watching the proceedings outside the hearing room.