Lender given another serve
A small Whakatane-based finance company, one of the few survivors of the sector’s meltdown has been given another rap over the knuckles by the Reserve Bank.
Friday, May 24th 2013, 6:00AM
Asset Finance, which has branches around the country, was temporarily stopped from seeking new investment last year due to fears the representation of a related-party loan could have been misleading to investors reading its offer documents.
Now the Reserve Bank has issued Asset Finance with a warning for breaching the 15% limit on related-party loans that non-deposit takers can have as a proportion of their total credit exposures.
And it has been used as an example for other lenders - the Reserve Bank issued a statement reminding the sector of its obligations.
It said: “Related-party transactions played a significant part in the finance company failures that have occurred since 2006. The requirements that are now in place are vitally important in terms of limiting the harm that can arise from such transactions. While such harm has not eventuated in the case of Asset Finance Limited, related party exposures can be detrimental to the interests of investors.”
The Reserve Bank said the issue appeared to have been resolved.
Asset Finance typically pays annual interest of 6% to 9.5% on deposits, with standard lending charges between 14% and 30%.
It had about $13.5 million in loans and advances at September 30, and owed about $13 million in debenture stock.
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