Building Society Holdings (BSH) is now Heartland NZ Ltd (HNZ) so might as well start a new thread with the new name.
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Building Society Holdings (BSH) is now Heartland NZ Ltd (HNZ) so might as well start a new thread with the new name.
Seems the silk purse remains a sows ear........
Obviously ACC does not share the pessimistic view of the above posters as a SSH notice today says that they now own 5.64% of HNZ. Like me they see more of the "Promissed Land" to come.
As mentioned previously on the BSH thread, it will be interesting to see where reinvestment rates sit going into the end of the govt guarantee, as Heartland seems to have more reliance on guaranteed deposits than the other affected institutions. Interest rates on debentures should be a pointer as to how things are going (particularly relative to any movements in bank term deposit rates).
So here is the picture of rates as they were from March until around the time of the recent PGC vote meeting:
http://img.villagephotos.com/p/2006-...8apr11.png.jpg
And here is the current:
http://img.villagephotos.com/p/2006-...-jun11.png.jpg
The change is pretty subtle - in the 12 month and 18 month rates, which have crept up just 0.25%. However, by comparison, I would estimate that the typical bank term deposit rate has fallen by 0.5%, so the spread against banks has been widening.
No worries here yet, but worth watching.
NZX have announced Hearthland is to enter the NZX-50 index on June 20 (and PGC will exit it.)
ACC do have (or at least did have) a good record, but not for reasons of immediacy.
Levies pay the claims of today. The reserves are for the long tail typical of a compensation book that may need to pay long term injury claims years so there is very little that needs to be immediate beyond standard cashflow /treasury / cash management needs that the levies already meet. ACC are typically profitable on a cashflow basis and have little need to tap technical reserves - it's on the long tail actuarial view that reserves need to be established for.
This is also the secret of how private Worker Comp companies make money in other countries - they trade on smaller insurance margins because they understand the funds may be captive for decades before being required for claims so investment returns are consequently higher then a short tail insurance book like say State Insurance's who have to pay for Motor claims in short order.
Heartland New Zealand to acquire PGG Wrightson Finance
http://www.nzx.com/markets/NZSX/HNZ/...ghtson-Finance
Well it wasn't exactly a surprise :) Seems a fairly conventional arrangement I guess. Good to see an assurance there will be no EPS dilution resulting frm the placement. I wonder how much in excess of 10% the ROE will eventually be? I'm not that confident it will be much, but would like to hear others opinions on that.
I am waiting for the announcement of SPP, so i just need to spend $30+ for the engagement of SPP:)
The article by Tim Hunter in today's Sunday Star Times on Heartland is well balanced and fair.
"And while there are undoubted risks that Heartland will not achieve its goals,its management have so far demonstrated a clear strategy and excellent execution.
On those grounds it may earn a place in the portfolio."
Yes Percy a well balanced article but I hope Hunter wasn't swayed by what Cairns from Forbar told him .... that guy is more passionate about PGC/HNZ than you are
As long as HNZ remember that at the core of their business is 2 old fashioned Building Societies they should do OK - building societies that traditionally solid instutions which for generations have taken members savings in and prudently lent that money out on rock solid investments without taking on much leverage and associated risk.
Go too far away from this principles and think they can make zillions from a different approach then maybe the aspirations wont be achieved
Bit of a worry when that head finance man says 'Heartland aims to encourage depositors by becoming a bank, reasoning that people are more relaxed about putting money in a bank than with a finance company' So is becoming a bank just one big (and expensive) marketing ploy
This is what happens when Building Societies become financial instutions with a treasury department and change their business model .... and probably why the world is in such a mess today
A great article by John Kay in the Financial Times - We let down diligent folk at the Halifax
http://www.johnkay.com/2008/09/24/we...at-the-halifax
Even if you don't read the whole article (it is a short one) read this bit
The business I joined gathered deposits from small savers, mostly through its branches. It lent the proceeds to house buyers. Founded as a self-help organisation by provident Yorkshire folk 150 years ago, the Halifax became the world’s largest mortgage lender. Its quality of service and competitive interest rates trounced conventional banks in the UK retail savings market. The simple business model was very robust. In the early 1990s, a combination of high interest rates, recession and falling house prices posed much more serious problems for UK homeowners than anything seen, or likely, in the current credit crunch. But the Halifax remained profitable and mortgages readily available
Accepting deposits and underwriting and administering mortgages requires that millions of records should be maintained and updated every day with almost no errors. This activity does not require flair or imagination but does require conscientious individuals with integrity and loyalty. The Halifax was a precision machine that made the most of the talents of ordinary people. I came to understand the fundamental incompatibility of the cultures of retail and investment banking and why the marriage of the two so often leads to tears.
Accepting deposits and underwriting and administering mortgages requires that millions of records should be maintained and updated every day with almost no errors. This activity does not require flair or imagination but does require conscientious individuals with integrity and loyalty. The Halifax was a precision machine that made the most of the talents of ordinary people. I came to understand the fundamental incompatibility of the cultures of retail and investment banking and why the marriage of the two so often leads to tears.
(Really a story about business sustainability but thats another topic)