NNnnnnooooooooooooooooo.
Lets not start this one up again. There goes another 2 pages on this thread about rules and discussions and not agreeing to disagree....
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To be fair I think the Heartland remark was a peripheral remark to the main thrust of the article, and that was how well the Oz banks have done for NZ shareholders.
I think the main reason that I, er I mean Terry, wrote that Heartland comment was to demonstrate that being declared a bank might not be enough any more.
In times past, putting money in the bank came with the presumption that at some point in the future the depositor could get that money out again. Then came bank fees, followed by corporate bankers borrowing the security of the Mum and Dad investor to make profits while leaving them to suffer the losses when really big corporate deals went bad. The problem as I see it is that the word 'bank' no longer necessarily implies the pillar of trust that existed in days of yore.
Graeme Wheeler granted Heartland a banking licence in his first week on the job. He apparently changed the bank licence application to do it rules, which as reserve bank governor he was entitled to do. But I have to ask did he also devalue the word 'bank' in the process? By their own admission Heartland do not attempt to go toe to toe with the big banks. Heartland outsources their foreign exchange offerings for example.
Heartland have their niche in machinery and farm financing, but how many people on the street really see them as bank? They still look to me more like a finance company with a bank sticker plastered on top. Their credit rating is well below that of the big Aussie banks, although I would point out it would be unreasonable to expect anything else.
The point is Heartland is not too big to fail. I concede that from a management perspective, Heartland are making a good fist of things, so far. But even a good climber is still vulnerable to an avalanche of bad debt. Good luck to all Heartland investors. I may join you one day. But first I intend to wait for another snowmelt, and all should be revealed in the Full Year annual accounts in the second half of the year.
SNOOPY
Bank will always mean something to me,an ordinary on the street kinda person,and although they may have a wee bit of a bad rap due mostly to the aussies fee greed,it still has an aura around it,I think that what goes around comes around,and eventually they will all be repected as such again.
'fast growing' in every sense is a comparative term. If you look at the Heartland FY2012 accounts in comparison with the FY2011 accounts, then yes they have grown. However in that time they absorbed PGG Wrightson finance. In comparing the size of Heartland, if you use the the sum total presence of "PGG Wrightson FY2011" + "Heartland FY2011" and compare that with "Heartland FY2012" (the apples with apples comparison IMO) then the collective "Heartland' is actually shrinking.
Of course I would argue that this is a good thing as it shores up Heartland's capital position. But to the faithful, pointing out that Heartland is not growing is heresy.
SNOOPY
Exactly, Heartland is a finance company with the added benefit of having some Reserve Bank supervision. Providing Heartland can stick to lending in areas where it has experience, then we should do well. Down here in Christchurch we have all sorts of heavy machinery breaking up the roads. Excellent business for Heartland. (With a branch in Sydenham).
Ooops .. Pass the Bi-carb please..
Snoopy is /was and is still factually wrong ,about the granting of the bank licence,and how long Wheeler had been in the job.
Growth in earnings is more important than growth of loan book.
Back on line at Auckland airport.No internet access at Beachcomber Motel Kawakawa Bay.Did enjoy my book.