Rates Round Up
PGG Wrightson loses ground; Govt payout on Strata Finance still unclear.
Sunday, January 17th 2010, 9:14PM
by Paul McBeth
PGG Wrightson loses ground
PGG Wrightson Finance lost some ground in the battle for depositors' funds through the end of 2009, with deposits falling 8.6% to $278 million in the five months to November 31, according to its new prospectus.
The finance unit of PGG Wrightson blamed the decline on "reduced levels of new deposits and demand for call money."
Still, the reinvestment rate was maintained at 75%, which is "comparable with historical averages."
The company boosted its net interest income by almost 28% over the period, though its earnings were down 10% compared to the same period a year earlier, due to the introduction of the retail deposit guarantee scheme, and increased provisions for bad debt.
The finance company's provisions for impaired debts rose to 1.2% of finance receivables in the five months through November, from 0.6% at June 30. The loan book remained "relatively static" and had a net value of $559 million, while assets under management were at $655 million.
Govt payout on Strata Finance unclear
The first receivers' report into failed Strata Finance has confirmed taxpayers will have to stump up some money to depositors after Treasury Secretary John Whitehead announced the company was covered by the government's deposit guarantee scheme last April, though it is unclear as to how much this will be.
Receiver William Black of Mcgrath Nicol said "based on our review of each loan and given that all loans are in default we do not expect investors to be repaid in full," while unsecured creditors will likely receive nothing.
Strata went into receivership owing $448,000, with its only assets being eight loans and two tax refunds.
Paul is a staff writer for Good Returns based in Wellington.
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