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SCF not as big a favourite among advisers as it used to be

South Canterbury Finance was not as big a favourite among advisers as it had been in the past, though the government’s quick action to pay-out all debt holders will help quell too much uncertainty.

Tuesday, August 31st 2010, 10:37PM

The firm's directors called in receivers Kerryn Downey and William Black of McGrathNicol after they failed to close a deal that would have injected enough capital into the lender to keep it going. That triggered the government's retail deposit guarantee, which saw Finance Minister Bill English write out a cheque to trustee Trustee Executor for $1.6 billion to cover off investors, and offer a loan of $175 million to pay prior-ranking debts, such as George Kerr's Torchlight Fund.

Though the outcome was far from ideal, with preference shareholders owed some $100 million likely to walk away with nothing, the government's quick action helped keep quash any concerns that could have lingered, according to Kapiti Coast stockbroker Chris Lee.

Lee said SCF had previously been a favourite among advisers, but in recent months, as its outlook deteriorated, many had shied away from investing their client's money with the lender.

"It's not a happy day, but it could've been a lot worse than what it was," Lee said.

Though the government's decisive act to stump up the cash immediately has staved off most of the uncertainty that could have plagued investors, there will still be some nervousness amid firms that had loans with the financier which is still to play out.

The government expects to the receivers for SCF will take three to four years to sell down the lender's assets, and Finance Minister Bill English assured a media conference that there will not be any fire sales of the firm's assets.

Lee expects the next step will be for the receiver to look for a buyer, with a sale of the business as a going concern the primary goal.

English said any major decisions will have to be run by the government, which will be the lender's sole beneficiary under the receivership once all investors and prior ranking charges have been paid out.

Standard & Poor's downgraded the lender to a ‘D' rating, as expected, after the receivership was announced.

For more stories on SCF's demise go to www.depositratess.co.nz

« South Canterbury calls in receiversKiwiSaver mismatch a 'huge challenge' for advisers »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.29 3.45 3.85
ANZ Special - 2.79 2.95 3.35
ASB Bank 4.45 3.35 3.19 3.85
ASB Bank Special - 2.85 2.69 3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - ▼2.79 ▼2.69 ▼2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.39 ▼3.29 ▼3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.80 2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC ▼4.40 ▼2.95 ▼2.95 ▲3.69
Kainga Ora 4.43 ▼3.29 ▼3.39 ▼3.85
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - 2.65 2.79 3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
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SBS Bank Special - 2.99 3.05 3.69
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The Co-operative Bank - Standard 4.40 ▼3.29 ▼3.45 ▼3.89
TSB Bank 5.34 3.59 ▼3.59 4.19
TSB Special 4.54 2.79 ▼2.79 3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.79 ▼2.69 ▼2.79
Median 4.55 3.32 3.39 3.69

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