South Canterbury Finance Limited

[Balance]

https://www.stuff.co.nz/business/117...ensation-fight

Chris Lee trying to get taxpayers to bail out his clients who he put into SCF preference shares?

Taxpayers are already out of pocket by $1.6 billion, no thanks to the Allan Hubbard and his gross mismanagement and incompetent lending and investing practices.

Suggestion for Chris (he once thought the sun shone out of Allan's posterior and considered him to be a financial giant) - sue Forsyth Barr and himself.

[Aaron]

I haven't read his book but wonder why he thinks taxpayers should bail out South Canterbury Finance shareholders?

Sadly one lot of participants in the collapse of the finance companies who played a big part but were not held responsible were "investment advisors" who advised clients to invest in finance company debentures while they collected commissions from the finance companies. It was outrageous but no one was ever held to account as far as I know. I heard stories like a widower asking a financial advisor how she should invest her life insurance payout and was told to put it all in mix of finance company debentures. I think Northplan in Whangarei got people out of diversified portfolios and overweight in Bridgecorp debentures.

[GTM 3442]

I haven't read his book but wonder why he thinks taxpayers should bail out South Canterbury Finance shareholders?

<snip>

SCF had two types of instruments - plain vanilla bonds, and perpetual preference shares. A whole lot of people were shoe-horned into both by the financial services industry, with no idea of what they were buying. Headlines of the time proclaimed the listing of the perpetual preference meant that "South Canterbury Finance had floated on the NZX".

When it all inevitably hit the fan, the bondholders got a government guarantee, but the preference share holders didn't. Given the way that the things were marketed and bought, I reckon they probably should have.

But the waters were well muddied by the bottomfeeders who were buying both the preference shares and the bonds at about 25c in the dollar. And once the bonds were government guaranteed, it was fantastic - a government guaranteed 20% yeild.

Mister Lee is concerned with the poor sods who were shoe-horned into something they didn't understand at the time of issue , rather than the bottomfeeders.

[Aaron]

Mister Lee is concerned with the poor sods who were shoe-horned into something they didn't understand at the time of issue , rather than the bottomfeeders.

I would be concerned that NZ taxpayer dollars are being spent reimbursing people who made bad investment decisions or relied on bad advisors.

[stoploss]

I would be concerned that NZ taxpayer dollars are being spent reimbursing people who made bad investment decisions or relied on bad advisors.

Problem was many of the elderly people that went to advisers, trusted them .They didn't know they were bad advisers . They had no idea that spreading 100 K , into 10 different finance companies wasn't a spread of risk ......
Pity their advisers didn't know this either, many were tainted by large commissions from the finance companies.

[Aaron]

Problem was many of the elderly people that went to advisers, trusted them .They didn't know they were bad advisers . They had no idea that spreading 100 K , into 10 different finance companies wasn't a spread of risk ......
Pity their advisers didn't know this either, many were tainted by large commissions from the finance companies.

It was a disaster, no doubt about it but still I don't think it is the NZ taxpayers problem. We will stump up for national super but they will have to accept a reduced retirement due to poor investing decisions. What should have happened was their "advisors" should have told them they were actually commission only sales agents for the finance companies. Instead it turns out their "advisors" were deceptive lying pieces of s**t that should have gone to jail. I don't know if the investors had any redress under consumer protection laws for being sold a crappy product.

[GTM 3442]

I would be concerned that NZ taxpayer dollars are being spent reimbursing people who made bad investment decisions or relied on bad advisors.

Oh Aaron! Those taxpayer dollars have already been spent, bailing out SCF and some of the others, getting on for a decade ago.

Mister Lee's book is mainly concerned with the shambles that was the collapse of SCF - the book demonstrating that greed, panic, and incompetence make very dangerous bedfellows.

[Aaron]

Oh Aaron! Those taxpayer dollars have already been spent, bailing out SCF and some of the others, getting on for a decade ago.

Mister Lee's book is mainly concerned with the shambles that was the collapse of SCF - the book demonstrating that greed, panic, and incompetence make very dangerous bedfellows.

Sorry not very knowledgeable just thought Balance's article (post 2929) was to do with Chris Lee wanting preference share holders to get taxpayer money as well.

[GTM 3442]

Sorry not very knowledgeable just thought Balance's article (post 2929) was to do with Chris Lee wanting preference share holders to get taxpayer money as well.

Well the bondholders got the benefit of the government guarantee, but the holders of the preference shares didn't. And seeing that both instruments were marketed to the same target audience, the difference seems rather inequitable.

That's the point of that little exercise - simple fairness.

[peat]

Musing regarding 'next time', some of the hybrid debt issues out there are shall we say are a little bit interesting. One hopes the default clauses never operate, though even with my cynical view it is hard to actually envisage these company's defaulting. Just taking as a random example with no slur attached at all , but say, Wellington Airport has a fair bit of debt out there even though the company isn't listed for shares. I mean its a steady business right?. Travellers all the time, including politicians whizzing around everywhere on our expense. But just say something went wrong.... the obvious one is an earthquake and I'm sure there is insurance so its probably something else. But just say something went wrong, theres $400 million of debt out there with hungry coupons.

WIA Debt 2019-12-11 140132.png

Debt issues have been the lifestay of the NZX for a while now. Theres quite a few. 144 to be precise. With total capitalisation of $34,000 M so I'll call that 34 billion.
https://www.nzx.com/markets/NZDX

They are all rock solid of course though.
Right?