by Jenny Ruth
Hanover's response was swift - it posted its latest results the same day Bridgecorp went into receivership.
Chief executive Sam Stubbs says that after it became public knowledge Bridgecorp was in difficulty "we felt we owed it to our investors" to make Hanover's financial position plain.
"When a company as big as Bridgecorp goes through a process like this, we have to be concerned," Stubbs says.
Bridgecorp's receivers, John Waller and Colin McCloy of PricewaterhouseCoopers, say Bridgecorp owes its investors about $470 million.
"Obviously, Bridgecorp going into receivership is bad news for the industry sector as a whole," says Strategic chief executive Kerry Finnigan.
He expects that, as with the Provincial collapse last year, Bridgecorp's collapse will make the "mums-and-dads" who typically invest in finance company debentures more cautious.
But neither the industry nor the government are likely to have been too surprised, Finnigan says. The government is already moving to regulate finance companies and will, among other measures, require them to obtain credit ratings.
Finnigan and, Dominion Finance chief executive Paul Cropp are keen to see the receivers release more information on Bridgecorp's affairs.
With about 30% of Bridgecorp's lending secured against first mortgages and another 52% secured against second mortgages, its investors are unlikely to end up losing all their money, Cropp says.
"Investors are likely to lose less in a finance company than they would in a Feltex," he says.
Bridgecorp investors may be further protected by insurance policies the company had with Lloyds of London.
St Laurence managing director Kevin Podmore says one likely result of Bridgecorp's collapse is a flight to the better quality finance companies.
Meanwhile listed company Dorchester Pacific's chief executive Andrew Walker says that Bridgecorp's collapse is likely to "further drive the chorus for regulation. I think that's an inevitable result. That's a good thing, frankly."
But there is a danger that the pendulum could swing too far the other way and end up damaging the "vibrant" finance sector, Walker says.
More on the Bridgecorp collapse
| « News Round Up | Sovereign takes regulation bull by the horns » |
Special Offers
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved