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Similiarities between Nathans and Bridgecorp

Monday, August 20th 2007, 11:06PM

by Philip Macalister

So we have another finance company collapse. This time the relatively small Nathans Finance which has about quarter the amount of investor money as Bridgecorp. There are some interesting similarities and differences between the two. Perhaps the most telling similarities are that both organisations had complex structures and deals out there which made them difficult to understand. I have been watching the announcements Nathans' listed parent company VTL has been making to the NZX over the past two weeks. They are complex and convoluted and may not necessarily have been delivering what they appeared to deliver. The second comparison is that both organisations are led by colourful characters with, let us say, interesting backgrounds. Two protagonists involved with Nathans/VTL are former financial planners Roger Moses and Gary Stevens. In their backgrounds there are a myriad of achievements and a couple of less pleasant events. One of the latter is that they ended up in court some years back on charges relating to a contributory mortgage business they were involved in. They were, after a number of hearings, cleared of all charges. However, one of the others, closer to the firm's dealings, ended up in jail. Why highlight this? Because it is important for investors and potential investors to understand the track record of the people running these finance company businesses. A blot in the copybook is quite possibly a flag which should be observed. The key differences between Bridgecorp and Nathans are that the former sourced around two thirds of its money from advisers. It is understood most of the Nathans money came directly from the public. Secondly Bridgecorp was a lender in the property sector while Nathans was used to finance a vending machine company. These collapses provide some useful lessons for investors. The two lessons highlighted here are; Look at the business, if it has complex deals you can't understand, be careful. The second lesson is watch the news and check out the people running the business. The key point is that there are many choices in the finance company sector and differentiating can be hard. If these issues above raise flags with you then move onto another company. PS: A very odd twist to this latest collapse is that Moses and Stevens are both life members of the Institute of Financial Advisers. No doubt someone will pick up on this and use it against the advisory industry. Roger Moses responds: The original judgement you will be referring to was from the  District Court which heard the evidence in the case against us and dismissed all of the numerous charges. The Crown appealed on questions of law alone to both the High Court and The Court of Appeal and were unsuccessful. If you had followed the proceedings carefully or at all you would also have been aware that we received the then record award of costs against the Crown, which reflected the view of the Court that the charges had no substance or merit. We can only encourage you to read the judgements mentioned above, all of which are a matter of public record, before making any further statements about this matter.
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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.74 7.74 7.09 6.95
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Lender Flt 1yr 2yr 3yr
Westpac 8.64 ▼7.49 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼6.89 6.75 6.39
Median 8.64 7.14 6.82 6.65

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