Hanover

[TwinkleToes]

Just wondering if anyone has heard anything about Hanover Finance. Is this company OK? It's not listed but presumably has a prospectus - what do they lend on? An old lady that I know has most of her savings in it. Please help with any knowledge you have. Thanks.

[The Doctor]

scale of their recent advertising to reassure investors would worry me.Be interested to know how much 'inter related ' lending is involved..i.e is Hanover funding Eric and Marks property specs...the only advice really is ;bail'!

[AMR]

How much extra are you getting compared to a bank now? 1%?

[winner69]

scale of their recent advertising to reassure investors would worry me.Be interested to know how much 'inter related ' lending is involved..i.e is Hanover funding Eric and Marks property specs...the only advice really is ;bail'!


There was an interesting article in the press a week or so ago that showed the amount of media spend by finance companies ....... Hanover was way in front of anybody else ..... and at rate card had spend $11M odd on media this year

[hairdresser]

Its a no brainer... same principals apply to all finance companies.

The latest accounts are from Jun 06 and they looked fine then.

The had a large amount of debentures maturing between Jan and Jun 07.

if reinvestment rates have been running at 50% before the VTL and PFG developments I'm pretty sure they will be a lot lower now.

IMO their cash and bank lines will be used up pretty quickly.

NB PFG had a solid loan book [no risky lending all 1st mortgage secured] and they're toast. If the market doesn't have confidence in them, why would they have confidence in a sector that does riskier lending.

[Billy Boy]

They are 79% into Property & Property development.
the 19% is into Transport ? and about 2% Other??
They are in the "Junk Bond bin" IMO
Strength of Balance sheet above average for the sector
Quality of Balance sheet , Property ?? Development ?? Not good at the moment
(No return on development until there is something on it)
Had quite a good profit return last balance date, but so did they all..
I think they may struggle to refinance their books, as investors are running to the banks,
hence the heavy advertising. and in this climate right now why take big risks when the
banks are only 1% below with minimum risk.
Some very good finance Coy's (IMO)
Marac
South Canterbury Finance (very solid this one)
Robo Bank , Banks in general.
UDC (bit low in their interest rates)
to name a few
Cheers BB

[QOH]

should allow early withdrawals at this point. I'm sure most of us would prefer to have our money in something like raboplus at the moment, but if we all try to get our money out early surely they will all crash. It's stressful, but I'm hanging in there hoping I'm not last in line. I guess the end of Sept, we will breathe a bit easier if all our interest is credited to us.

[lakedaemonian]

and in this climate right now why take big risks when the
banks are only 1% below with minimum risk.


Cheers BB

I can sympathize with anyone who loses money on investments...I've had my share over the years and they've all provided me with valuable lessons.

I just think people desperate to get that additional 1% yield(like old folks needing the income) can not be excused for failing to perform their due diligence.

This slow crash affecting finance companies didn't start yesterday.

I know "financial advisors" may have been selling garbage, perhaps knowingly, for the undisclosed commissions, but ultimately people need to perform their own due diligence.

Personally, I'd like to see as little additional regulation as possible as I think it will hurt us all in the end.

But I would like to see full disclosure of "who's making what".

If my "financial advisor" is recommending a product for me to purchase......what is he/she getting out of it?

Talk Radio was ready to lynch people yesterday......I'm afraid of any shortsighted response.

The greater the regulation, the fewer the players, the sooner we'll be left with only GE Money....

A couple finance companies falling over is far better than the sub-prime implosion in the US right now.

[baxter]

I suppose your little old lady invested with them because that nice Richard Long kept urging her to. She certainly shouldn't have all or most of her money with just one company..I think Hanover is reasonably secure though after all Eric Watson boss of the Warriors is a 50% owner I believe.

[Capitalist]

BillyBoy:They are 79% into Property & Property development.

And that is the high risk end of the market. Low-medium risk are financed by the Banks.

Also Hanover shareholder funds are nearly 100% invested in related party lending, so I am told.

[TwinkleToes]

Isn't he losing millions on an ENgland Retail Power chain?

[The Doctor]

BillyBoy:They are 79% into Property & Property development.

And that is the high risk end of the market. Low-medium risk are financed by the Banks.

Also Hanover shareholder funds are nearly 100% invested in related party lending, so I am told.


if this is true!...run for the hills!

[QOH]

I don't think Eric Watson is a director anymore.

[Balance]

BillyBoy:They are 79% into Property & Property development.

And that is the high risk end of the market. Low-medium risk are financed by the Banks.

Also Hanover shareholder funds are nearly 100% invested in related party lending, so I am told.

The prospectus shows 4 and half pages of inter-company transactions! Hard for me to make too much sense of it all but this, under 14.6 (note 7), might provide a clue -

Hanover Finance Limited and United Finance Limited entered into a joint agreement with Hanover Equity Partners Limited to underwrite an advance of $20 million to a third party. This underwrite facility was called upon in July 2006. Hanover Finance Limited receives $5.25 million in underwriting fees under this agreement of which $4.5 million (30
June 2005: $752,000) has been recognised as income in the year ended 30 June 2006.

Who was the third party?

[morv]

alarm bells ring in my brain on todays posts,a few years ago i have a memory of seeing a mention of inter related lending in this group of greater than 60% approx. at the time of the powerhouse purchase and now that entity is in liquidation i believe. this is a case of do your own reseach and then double check it.,and as other posters have expressed beware the excessive advertisers

[Onthemoney]

alarm bells ring in my brain on todays posts,a few years ago i have a memory of seeing a mention of inter related lending in this group of greater than 60% approx. at the time of the powerhouse purchase and now that entity is in liquidation i believe. this is a case of do your own reseach and then double check it.,and as other posters have expressed beware the excessive advertisers


Yes there certainly seems to be a large increase in advertising happening with this group.

[TwinkleToes]

YEs, I think it would be indeed prudent to close any accounts with this company given the above comments.

[Onthemoney]

YEs, I think it would be indeed prudent to close any accounts with this company given the above comments.

There will be queues outside their offices on monday. This is only the beginning.....

[QOH]

Maybe there will be queues but do you think they would let everyone withdraw early? Surely that would be the last nail in their coffin.

[Onthemoney]

Maybe there will be queues but do you think they would let everyone withdraw early? Surely that would be the last nail in their coffin.

Really depends on customer reaction.... I am sure they have their lines worked out for Monday. I am sure customers should be able to have their money payable on demand.

[QOH]

I guess legally they don't have to pay you until it matures? If I had money in Geneva that's the one I'd be queueing up for on Monday.

[TwinkleToes]

Why do you think Geneva is unsafe?

[OneUp]

should allow early withdrawals at this point. I'm sure most of us would prefer to have our money in something like raboplus at the moment, but if we all try to get our money out early surely they will all crash. It's stressful, but I'm hanging in there hoping I'm not last in line. I guess the end of Sept, we will breathe a bit easier if all our interest is credited to us.

He who escapes first survives. Get out!

[Snapper]

In this current environment, there's no way any finance company is going to allow early withdrawals for reasons that aren't specified in their investment statement. Even South Canterbury Finance has said that it will take a stricter line on early withdrawals so you can queue all you like but it won't make any difference.

Finance companies aren't banks and I would say that liquidity is going to be the major issue for a lot of them now. Poor lending was responsible for all of the failures up till now but PropertyFinance Group might signal that liquidity issues are starting to bite.

If you've invested into a solid company you'll be fine.

[Billy Boy]

Sorry I got a bit wrong

Transport, storage and avaiation 1.8%
Finance, Investment and Insurance 18.7%
Personal lending and Instalment 0%
Real estate investment / development 78.9%
Other / Not specified 0.4%

Managing Director Mark Hotchin (Chairman)
Ownership 100% Hanover Group Ltd
Trustee New Zealand Guardian Trust Company
Principal segment(s) Property

Number of debtors owing
10-20% of Equity 11
20-30% of Equity 6
30-40% of Equity 4
40-50% of Equity 0
50-60% of Equity 4
> 60% of Equity 0

[QOH]

Why do you think Geneva is unsafe?

I don't know that Geneva is unsafe, just that if I had to choose one out of Hanover and Geneva to take my money out of, Geneva would be my first choice. Who knows, they might all go down like dominoes.

[bermuda]

alarm bells ring in my brain on todays posts,a few years ago i have a memory of seeing a mention of inter related lending in this group of greater than 60% approx. at the time of the powerhouse purchase and now that entity is in liquidation i believe. this is a case of do your own reseach and then double check it.,and as other posters have expressed beware the excessive advertisers

Ever since Richard Long started appearing on these frequent TV ads I have suspected something wrong. Reminds me of Colin Meads "solid as I'd say." They seem to spend a huge amount on TV some much so I immediately change channels.

Wouldnt touch any of these. Why would you anyway when you can get really good interest at the Bank.

[777]

The margin between the finance companies and the banks was greater a year ago hence the reason investors placed their money there. Not worth doing now though.

I have money with Hanover and it has been there for about 7 years from the days of Elders. I would be brassed off to lose it but thems the breaks. Won't lose any sleep worrying about it. Just have to delay retirement a bit longer or until the next run up on NZO.

[QOH]

for some of the finance companies I'm invested to send in their responses to NZX. Didn't their time expire at 9.30am?

[Reihana]

Just posted by NZX:

All continuous disclosure responses received from listed finance companies

27 August 2007 - NZX confirms that it has received responses from all 15 companies from which it requested continuous disclosure statements before the 9.00am deadline today.

One company, Property Finance Group (PFG) Limited, requested a trading halt on Friday 24 August. The Board of PFG advised that it is investigating a number of restructuring opportunities. It is expected to advise NZX of those opportunities today. PFG's stock remains in halt.

NZX wrote to all listed finance companies, and listed companies with material finance company subsidiaries, on Thursday 23 August. NZX asked the companies to confirm that they are complying with their continuous disclosure obligations under Rule 10.1.1.

While NZX did not have specific cause to be concerned that companies were not complying, the letter provided an opportunity to the listed finance company sector to help restore confidence in the listed finance sector by demonstrating transparency.

Companies NZX wrote to are as follows:

Allied Farmers Limited
Cynotech
Dominion Finance
Dorchester Pacific
Lombard Group
MFS New Zealand Limited
Motor Trade Finance Limited
NZ Finance Holdings
PGG Wrightson Finance Limited
Propertyfinance Group Limited
Pyne Gould Corporation
South Canterbury Finance
Speirs Group
St Laurence
Strategic Finance

[whiteheron]

Reihana

I note that Hanover is not on the list of companies written to by the NZX
Is there a reason for this ?

PS Sorry Reihana, I think I should have directed my question to the NZX

[777]

Simple answer is that it not a listed company on the NZX.

[peat]

I took this photo two weeks ago and called it Hanover Hangman

http://img148.imageshack.us/img148/5686/hanoverhangmanyn1.jpg

[minimoke]

Hanover Finance is owned by Hanover Capital Ltd and Hanover Financial Services Ltd.

HFL website says they are part of Hanover Group.

HCL is wholly owned by HFSL.

Hanover Group is substantially owned by Hanover Group Holdings Ltd.

HGH is substantially owned by Hotchin Investments Ltd.

HIl is owned by Hotchin Trustees Ltd. None are listed on NZX or ASX.

Hanover Finance website shows four directors: Mark Hotchin, Greg Muir, Tipene O Regan and Sam Stubbs. Dwayne Mcgorman is also shown on the Companies office Register of directors. Eric Watson is a Director of a few of these companies.

Trying to sort through the number of name changes these companies have had over the years is too trying for a short post.

[boysy]

any one seen how many tv ads Hanover are at the moment thats got to be a bad sign in anyones books

[Onthemoney]

any one seen how many tv ads Hanover are at the moment thats got to be a bad sign in anyones books


They need the new money otherwise they could be in trouble as those with maturities pull out...

[boysy]

i know its a vicious circle but i think many people have tweaked onto the fact that many companies that use TV to place ads have gone under. Any one trying to sell a financial product in 30 seconds is clearly in trouble. look at what its done to other finance companies and more recently BurgerFuels IPO these ads are increasingly looking desperate lets just wait to see whos next to fall over.

[thereslifeafter87]

Hanover Finance is owned by Hanover Capital Ltd and Hanover Financial Services Ltd.

HFL website says they are part of Hanover Group.

HCL is wholly owned by HFSL.

Hanover Group is substantially owned by Hanover Group Holdings Ltd.

HGH is substantially owned by Hotchin Investments Ltd.

HIl is owned by Hotchin Trustees Ltd. None are listed on NZX or ASX.

Hanover Finance website shows four directors: Mark Hotchin, Greg Muir, Tipene O Regan and Sam Stubbs. Dwayne Mcgorman is also shown on the Companies office Register of directors. Eric Watson is a Director of a few of these companies.

Trying to sort through the number of name changes these companies have had over the years is too trying for a short post.

I think the ownership is roughly 50/50 Hotchin/Watson

[zigzag]

any one seen how many tv ads Hanover are at the moment thats got to be a bad sign in anyones books

Finance that get their funding direct from the public will of neccessity have to advertise more than companies that rely on financial advisers and other second parties. It is not automatically a bad sign.

[Scuffer]

The problem with finance companies is they are falling like dominos at the present time, money has been cheap for awhile everyone was lending,what happens when mums an dads start to pull their hard earned out of these companies and go for safer options? Dominos I know that none of my hard earned is in a finance company

[Dr_Who]

I assume further consolidation in the finance industry would be good for the industry. Those that do survive through this tough time will come out much stronger.

[baxter]

Chris Lee has an up to date run down on Finance Company liquidity in his newsletter today. Hanover seems pretty sound with a 'B' rating.

[Onthemoney]

Chris Lee has an up to date run down on Finance Company liquidity in his newsletter today. Hanover seems pretty sound with a 'B' rating.

I also heard that there is advice to only put your money in an A grade company at the moment.

[Hoop]

Chris Lee has an up to date run down on Finance Company liquidity in his newsletter today. Hanover seems pretty sound with a 'B' rating.

Yes, updated as from 27th Aug..today
Chris Lee also quotes that Hanover has $103M in cash plus banking facility. It seems that Hanover and the 9 other companies (Dorchester incl) he mentions "are abnormally liquid". "They have wisely cashed up, preparing for the slowdown".


It seems to me that following Chris Lee's review, Hanover is in good shape to weather the current financial climate, so their investors shouldn't have much to worry about.

I love his quote :D:D:D....."Bridgecorp, Nathans, First Step, Western Bay and National Finance were as relevant to real financial institutions or finance companies as a home-made trolley is to a Mercedes Benz"....

Reference: http://www.chrislee.co.nz/product%20news.htm

[Balance]

Chris Lee? Same guy who rated Provincial very highly. Same guy who wrote about mana, directors' business acumen etc at Provincial. Where's my salt shaker?

[Onthemoney]

Have to agree. I am trying to track my source but there are only 5 finance companies worth putting your money in. Three of them are South Canterbury, Marac and UDC - can't remember the other two. These were rated as A.... Anyone else have the info?

[Rif-Raf]

Hanover are extremely profitable as they have scale. Their margins are very high - an indicator of their relative risk.
Marac are geniune blue chip , also a large book so they have scale too, but higher quality/lower margin loan book.

[Onthemoney]

Hanover are extremely profitable as they have scale. Their margins are very high - an indicator of their relative risk.
Marac are geniune blue chip , also a large book so they have scale too, but higher quality/lower margin loan book.


I am interested to know what you mean by 'scale'.... Cheers in advance.

[Year of the Tiger]

Have to agree. I am trying to track my source but there are only 5 finance companies worth putting your money in. Three of them are South Canterbury, Marac and UDC - can't remember the other two. These were rated as A.... Anyone else have the info?

The other 2 are Strategic and St Laurence

http://www.chrislee.co.nz/Fixed%20Interest%20-%20explanations.htm

Here is the link for the page on Chris Lee's report on Finance Company Debentures.

Cheers
YOTT

[Onthemoney]

The other 2 are Strategic and St Laurence

http://www.chrislee.co.nz/Fixed%20Interest%20-%20explanations.htm

Here is the link for the page on Chris Lee's report on Finance Company Debentures.

Cheers
YOTT


Cheers YOTT was just tracking it down.

[TwinkleToes]

Chris Lee? Same guy who rated Provincial very highly. Same guy who wrote about mana, directors' business acumen etc at Provincial. Where's my salt shaker?

In fairness, Provincial probably went over because there was fraud involved on the car market book, something only an informed insider would have known. The company may yet be resurrected. It amazes me that that old rugby guy Cyril ??Meads has not been taken to task for his advertising stuff.

[Onthemoney]

In fairness, Provincial probably went over because there was fraud involved on the car market book, something only an informed insider would have known. The company may yet be resurrected. It amazes me that that old rugby guy Cyril ??Meads has not been taken to task for his advertising stuff.

Colin - Not knowing that in NZ watch out - don't they lock you up in some countries for not knowing national heroes.....

[Hoop]

Chris Lee? Same guy who rated Provincial very highly. Same guy who wrote about mana, directors' business acumen etc at Provincial. Where's my salt shaker?

Yes he did, but to be fair, so did many other financial advisors of equally sound reputations.

I remember reading from his (Chris Lee) posts that he admitted being caught out, and I admire the guy for that and what he did for his clients..read below..I underlined a quote below not Chris Lee

Quote Chris Lee June 2006 ....."So clients of advisors are quite right to be furious with their advisors for failing to identify Provincial as at risk of failure.

Naturally, more than anyone's, my failure will be criticised, given the time I spent with Provincial and such companies, and given the criticism I make of those who collect commission but make no or feeble effort to acquaint themselves with the company.

My errors may not be restricted to the following but they were mainly:-

My failure to foretell the presence, let alone extent of "no-repayment" loans being accepted by Provincial, and the failure to see the exponential growth in these bad debts.

My failure to doubt the directors often discussed ability to recapitalise Provincial to meet sound trust deed ratios.

My failure to see past the auditor and trustee approved September '05 accounts which indicated a bad debt provision in keeping with an obvious, but not fatal level of bad debts.

As a goodwill gesture to atone for these failures, my company has disclosed to its clients that it will be providing meaningful assistance to all our Provincial clients should there be a shortfall in the capital repaid.

That assistance will total nearly seven times the amount of brokerage we ever received from Provincial.

We do not expect our assistance to lessen any criticism of me, especially as criticism from non-clients, and one newspaper reporter, has simply been silly, one reporter, from a position of no knowledge, alleging negligence.

My definition of negligence is the failure to dedicate adequate attention, skills or resources to perform duties faithfully.

Provincial Finance's CEO has confirmed, and no doubt would do so in writing, that no broker has been as thorough, as persistent, had as regular contact, or been more demanding for current information than me.

I had, and have, no access to the auditors or trustees, but accepted that in signing off accounts and offers that they concurred with the published documents.

Have I been fed a diet of codswallop? I doubt it. If the director shareholders knew that bad debts would reach $60 - 100 million, they would not have put in more of their personal money to enable Provincial to carry on with the same lending model.

One might debate exactly how much more they put in, based on different valuations, but as more than $10 million was in cash, one can hardly say they put in a token amount. Would the auditors sign off accounts they knew to be inadequate and misleading? Not a hope. They simply did not spot the oncoming storm.

Would the trustees accept accounts showing relatively normal levels of bad debt if they knew otherwise. No, sir. Crazy if they did.

My failure to forecast Provincial's inability to make money from its car lending book was partly my failure to understand that the directors and auditors were astray in their calculations, most worryingly it was also my ignorance of the new levels of dishonesty that pervade car dealers and used car buyers, and finally it was my acceptance that the directors were coping with the problem, under the trustees' supervision.



A few months later it is now revealed that Provincial demise was not as bad as it was earlier thought and it now seems certain that the investors will get their money back, and possibly with some interest.

Reference: http://www.chrislee.co.nz/JUNE%202006%20TAKING%20STOCK.htm

Disc I do not know nor had any dealings with Chris Lee.

[Reihana]

I recall media coverage of Provincial having trouble with its car loans about six months before it fell over, and interest.co.nz also raised how quickly they'd grown that car lending book. It looked reckless and proved to be. Fraud was a problem but that it was so widespread as to be a major factor in the collapse suggests there weren't adequated systems in place.

I think Chris Lee's ratings are highly subjective. There are companies he rates Bs, Cs and Ds that by his own criteria don't deserve those ratings - and the odd E that probably doesn't deserve to be in the basement either.

But have a good read of his site and you'll learn that part of his success with his aged constituency of investors is repeating time and again how independent he is and how companies need to do a lot of convincing him of their skill to get his support. It becomes clear as you read that for him to make this distinction to good affect he needs heroes and villains - proof that he's putting in the hard yards on investors' behalf. Look through his archives and you'll see a number of companies copping a pasting time and again (some fairly, like Bridgecorp). But compare the numbers on some of those companies -gearing, percentage of shareholder funds, consistent history of profits etc etc - and you find some companies Lee slates delivering better and more reassuring numbers for investors than some of his B, C and D rated companies.

That said, I think he's a good broker of the services he provides. It just strikes me, having done some serious reading on his site (which is easy and quite entertaining - it's no surprise he was once a journo) that too much is being made of the science behind a ratings system that is clearly subjective.

[Onthemoney]

Yes he did, but to be fair, so did many other financial advisors of equally sound reputations.

I remember reading from his (Chris Lee) posts that he admitted being caught out, and I admire the guy for that and what he did for his clients..read below..I underlined a quote below not Chris Lee

Quote Chris Lee June 2006 ....."So clients of advisors are quite right to be furious with their advisors for failing to identify Provincial as at risk of failure.

Naturally, more than anyone's, my failure will be criticised, given the time I spent with Provincial and such companies, and given the criticism I make of those who collect commission but make no or feeble effort to acquaint themselves with the company.

My errors may not be restricted to the following but they were mainly:-

My failure to foretell the presence, let alone extent of "no-repayment" loans being accepted by Provincial, and the failure to see the exponential growth in these bad debts.

My failure to doubt the directors often discussed ability to recapitalise Provincial to meet sound trust deed ratios.

My failure to see past the auditor and trustee approved September '05 accounts which indicated a bad debt provision in keeping with an obvious, but not fatal level of bad debts.

As a goodwill gesture to atone for these failures, my company has disclosed to its clients that it will be providing meaningful assistance to all our Provincial clients should there be a shortfall in the capital repaid.

That assistance will total nearly seven times the amount of brokerage we ever received from Provincial.

We do not expect our assistance to lessen any criticism of me, especially as criticism from non-clients, and one newspaper reporter, has simply been silly, one reporter, from a position of no knowledge, alleging negligence.

My definition of negligence is the failure to dedicate adequate attention, skills or resources to perform duties faithfully.

Provincial Finance's CEO has confirmed, and no doubt would do so in writing, that no broker has been as thorough, as persistent, had as regular contact, or been more demanding for current information than me.

I had, and have, no access to the auditors or trustees, but accepted that in signing off accounts and offers that they concurred with the published documents.

Have I been fed a diet of codswallop? I doubt it. If the director shareholders knew that bad debts would reach $60 - 100 million, they would not have put in more of their personal money to enable Provincial to carry on with the same lending model.

One might debate exactly how much more they put in, based on different valuations, but as more than $10 million was in cash, one can hardly say they put in a token amount. Would the auditors sign off accounts they knew to be inadequate and misleading? Not a hope. They simply did not spot the oncoming storm.

Would the trustees accept accounts showing relatively normal levels of bad debt if they knew otherwise. No, sir. Crazy if they did.

My failure to forecast Provincial's inability to make money from its car lending book was partly my failure to understand that the directors and auditors were astray in their calculations, most worryingly it was also my ignorance of the new levels of dishonesty that pervade car dealers and used car buyers, and finally it was my acceptance that the directors were coping with the problem, under the trustees' supervision.



A few months later it is now revealed that Provincial demise was not as bad as it was earlier thought and it now seems certain that the investors will get their money back, and possibly with some interest.

Reference: http://www.chrislee.co.nz/JUNE%202006%20TAKING%20STOCK.htm

Disc I do not know nor had any dealings with Chris Lee.

Well quoted Hoop. I too have had no dealings with him, but do respect his genuine thoughts.

[Reihana]

I'm impressed by that too - he copped it on the chin well. And went to the aid of those who invested with him. That's to be applauded.

[Onthemoney]

I'm impressed by that too - he copped it on the chin well. And went to the aid of those who invested with him. That's to be applauded.


Yes - in business this is very important. He certainly came off best there. A lot of people could learn from his show of integrity

[TwinkleToes]

Colin - Not knowing that in NZ watch out - don't they lock you up in some countries for not knowing national heroes.....

Why is Cyril/Colin? Meads a national hero? Did he win a medal in the war or something? He certainly can't be a hero to the ma and pa Provincial Finance investors. He also advertises a Snake Oil formula; Bob Charles Velvet. Talks about chasing someone called Vera around his house.

Sounds like a bit of a meat head to be honest on the TV. If he weren't on TV and I met him in the street I would think he was a manual labourer of some kind. Drainage probably.

[Hommel]

Says alot about NZ culture, Twinkletoes. A man plays a few games of rugby, scores a few trys and is a national hero forever. Any other sport, one might get a mention after a lifetime of dedication. LOL.

[Rif-Raf]

I am interested to know what you mean by 'scale'.... Cheers in advance.

The volume of their busness is quite significant meaning their overheads can be spread over a wider base.
If you look at Hanover & Marac, they have around $900m - $1.3b in loans and their overheads are around 15% of their revenue (despite all the TV advertising they do)
Compare that to say a small player like Asset Finance with a loan book of $20m and overheads accounting for about 60%+ of their revenue.

While investors need protection, a downside of increased regulation is that compliance costs become too high that there are large barriers to entry resulting in dminished competition.

[Reihana]

In the IFR's afternoon email:

HANOVER POSTS RECORD PROFIT

Hanover Group announced a record pre-tax profit of $60.6 million, up 5.3% compared to the previous financial year.

Disclosure of interest: none

[Capitalist]

Check out the debt reserves when looking at Finance Company profits.

[Halebop]

Check out the debt reserves when looking at Finance Company profits.

Cap I think perhaps you are referring to "Doubtful Debt" provisions? The problem with Doubtful Debt is that it needs to be identified in order to be doubtful. The worst performers will be oblivious and the devious will be actively creative in their reporting.

Even prudential authorities turn a blind eye to doubtful debts in the glare of potential systemic failure. In the early 1990's your own Citibank amongst many others were thought to be either insolvent or close to in the USA following the general S&L industry collapse and end of the Asian inspired US property bubble. If I remember rightly by Citi's own reckoning they thought their equity ratio had been whittled down to 2% despite still reporting operating profits and nobody felt like seriously digging into the numbers. In the UK in the mid 90s many banks and building societies under-reported doubtful debts with tacit approval of the regulators - there wasn't enough money anywhere to prop up the whole crumbling edifice should someone actually have been forced to call up the worthless paper being shuffled around. Everybody decided to hold their breath, wait for the property market to get better and hope for the best instead.

If development markets really do soften, I'd be more concerned by the finance companies (and banks) without higher provisions. Bridgecorp hadn't done much to raise flags on its Fiji book for example.

[metro]

I have taken this from NZ Herald website - I cannot verify its authenticity

Seventh firm folds as finance crisis deepens

Page 1 of 2 View as a single page (http://www.nzherald.co.nz/section/story.cfm?c_id=3&objectid=10460642&pnum=0) 5:00AM Thursday August 30, 2007
By Adam Bennett (http://www.nzherald.co.nz/author/index.cfm?a_id=263)
http://media.apn.co.nz/webcontent/image/gif/hanover1.gif


Just a day after Property Finance was placed in receivership, yet another casualty - the seventh of the shakeout hitting the industry - will be announced today.

Richard Agnew of PricewaterhouseCoopers last night said he would be issuing a press release this morning advising of the receivership but refused to confirm the name of the company.
"I want a chance to talk to staff before they read it somewhere," he said

[QOH]

Place your bets now. I vote Geneva.

[Reihana]

I'd have thought it's only Geneva if PwC has been called in at the last minute; the auditors in its current prospectus are Staples Rodway.

[777]

The auditors would be the last people to be brought in for a receivership. Auditors verify the accuracy of the annual accounts so it is possible they could carry some responsibility in the current state of affairs of the company.

[Darchie]

five star by the sounds

[777]

BREAKING NEWS: The finance company was thrown into further turmoil today when Five Star Consumer Finance became the seventh finance company in 18 months to be put into receivership.
It was the third finance company to collapse in just over a week following the appointment of receivers for Property Finance Group and Nathans Finance.
NZAX-listed Property Finance yesterday was put into receivership with debenture debts of over $80 million and loans of over $630m.
Last night Brendan Gibson of receivers Ferrier Hodgson said it was too early to confirm Property Finance's claims debenture holders would get all they had lent.
Five Star was incorporated in 1988 and is a wholly owned subsidiary of Antares Finance Holdings Ltd, owned by North Island shareholders.
It is the 41st ranked finance company by size according to a New Zealand Herald survey this week. Its trustee is Covenant Trustee Co Ltd.
- NZPA

[Capitalist]

...If development markets really do soften, I'd be more concerned by the finance companies (and banks) without higher provisions. Bridgecorp hadn't done much to raise flags on its Fiji book for example.

Exactly Halebop. The debt reserve issue is critical, and one of the main reasons why the accounts and these 'record profits' must be looked at with a jaundiced eye.

The opinion in some circles is that this issue makes the larger finance coys actually more vulnerable than the small ones.

[I.T.Ancient]

Of course, some of them have no need for debt provisions because they simply renegotiate loans to avoid the day of reckoning. They're as slippery as eels when is comes to pinning down their true circumstances. Rule of thumb: If they claim to have no impaired loans don't touch em with a barge pole; If they admit to impaired loans, approach with great caution.

[whiteheron]

I wonder what the name "Five Star" was supposed to convey to investors ???

No prizes for getting that one right !!

[Billy Boy]

Place your picks
I pick these coz none of them have any provisions for impaired loans.
And their Balance sheets are not very good.

Add to the list please, But try to give a reason(s)
Disagreement is fine. But why...
Rifleman Finance, Capital Merchant, Equitable Mortgages, MFS Pacific

[metro]

Re my post above...why did NZ Herald add in the Hanoover Group logo in their article on the latest finance company receivership....I note it was quickly removed but it is is either

1. One helluva bad error from NZ Herald or,
2. A very poorly placed advertisement from Hanover.

[QOH]

lol must admit my heart sank for a few secs when I opened the link.

[SectorSurfa]

when we furnished our new place, there was a really good deal on the finance for our small package $5k (bought most with cash)

interest free for 50 months

I guess they rely on defaults, and discount product was also ok.


guess who HANOVER- new retail finance product called MYBUY.

(they must get a % straight away from the retailer)

[777]

From stuff.co.nz


NEW 1:01PM Friday August 31, 2007

Dorchester Pacific Finance has decided to stop funding its subsidiary Senate Finance Limited, which offers loans on used vehicles

With the recent collapse of seven finance companies, Dorchester is reassuring investors it is not in trouble.

Chief Executive Andrew Walker says the company is in negotiations to dispose of the Senate Finance loan book.

He says with finance companies falling over he is not worried about the timing of the move, which he says is a strategic one.

He says most people understand the decision has not been taken because the business is in trouble.

[The Doctor]

knew Hanover have 'Plenty' a free mag interspersed with investment solicitations...free for current investors...main lending appears to be Pauanui...and 'Jacks Point'...Awen signed up...maybe a few more warriors will find living in the Otago cold ..inviting!

[The Doctor]

BB + RATING is BELOW investment grade.