These shortcomings related to corporate governance and business process.
Bridgecorp says its intention is to use the process as a guide to benchmark its performance relative to its peers, so it can make any necessary changes in line with ‘industry best practice’ to maximise performance and minimise investor risk before making its rating public.
Rapid Ratings said in its report that “at a high level, Bridgecorp can be considered to have a strong financial performance coupled with a strong overall financial position (including liquidity, profitability and Lloyds insurance cover for many of its investments against loss)."
"The company is following a clear business model and has the management skills and experience to manage the risks of lending into the property development sector on which it is focused. Bridgecorp has an experienced board including independent directors."
The company says it is committed to the on-going ratings process with a view to achieving “investment grade” status in the short to medium term.
Managing director Rod Petricevic says that none of these matters are systemic and that they are able to be remedied.
"We have adopted a number of the recommendations already, including such things as credit, audit and remuneration board committees. We are upgrading our lending manuals and procedures and in the process of commissioning a new loans administration system called ARM, purchased from BaycorpAdvantage. This is a proven system in use in Australia."
He says that these last two initiatives alone will cost the company more than $500,000 in the current year but it "is money well spent and essential to our future."
Other issues raised by Rapid Ratings have been prioritised and are projected to be complete and implemented by June 30, 2004.
"The company several years ago committed to change and expansion. The transition from a small local lender into a medium sized financial institution operating successfully on both sides of the Tasman is coming to fruition. We see the rating process as an integral part of that transition and recognition of our achievements. At this stage in our history a rating one below investment grade is very satisfying," he says.
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