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PGC - Licenced to Bank
http://www.stocknessmonster.com/news...=NZSE&N=170771
What an interesting day to choose to announce that they are applying for a licence to become a specialist NZ Bank!
What are the benefits for PGC and why would they do this?
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Member
The benefits might be: the ability to call oneself a bank, participation in the settlements system, liquidity line with RBNZ via repos for certain assets, ability to offer check accounts,
Downside is a minimum level of capital, RBNZ regulatory oversight, rigid capital levels ( RBNZ is the most inflexible of all the central banks on regulatory capital types)
Note that in NZ bank deposits are not guaranteed by the government. Having said that wiould the NZ government allow a major bank to fail. See BNZ
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cheaper funding costs, punters get more confidence ...
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M/D Brian Jolliffe comes with a distinguished banking background. Perhaps life at PGC is becoming a little boring!
Are they looking to use the PGG Wrightson connection to compete for farmers' business?
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Bank..?
ON the surface it sounds a good idea and NZ needs its own banks as not to many details
are forthcoming time will TELL..
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Attempting to head in the right direction - probably on the back of opportunity for Marac under the GG.
Just checked their investment rates and if my memory of a week ago is correct, I think they have already dropped the 18 month rate by about 1.5%, so it seems they are feeling confident (South Canterbury still offering about 2% more on 18 mth investment)
PGW makes up about 1/3rd of s.p. and recent profits though, so will also have a hefty influence on where the s.p. goes.
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Couldn't understand why the market's initial reaction to today's restructuring announcement was to mark the shares UP! But then, after the detail had been digested, reality set in and the sp dropped away. A further hefty write-down of property loans and a cash issue - at no doubt a hefty discount - is hardly the sort of news that is share price enhancing.
The George Kerr development is an interesting one though. I actually hold shares in the unlisted EPIC No. 1 which is a PIE entity set up by Kerr to acquire, via Macquarie Bank entities, a small indirect interest in Thames Water in the UK. The holding structure is quite convoluted, as one would expect with Macquarie, but the tax-effectiveness means that the dividend yield is around 15%. EPIC has also recently acquired, again via Macquarie, a 17% interest in Moto, a UK motorway services area operator; those who have travelled on British motorways will know how exhorbitant the prices are when one stops for a coffee and sandwich at these monopolistic spots.
Kerr must be optimistic that he can use his network to raise funds to finance these toxic assets of MARAC's. In addition to his Macquarie connections he has been involved in a London based global hedge fund and was Chairman of Brook Asset Management from its inception until it was taken over by Macquaries. And, of course, he is also part of the Canterbury "establishment" - First Four Ships, Christs College, and all that!
Setting the price at which the toxic assets are transferred into the "Bad Bank" will be pivotal to this whole exercise.
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Front end loading and related party loans.
Who the hell would participate in this company's capital raising and/or buy its shares?
http://www.nzherald.co.nz/business/n...ectid=10586446
ps: PGC simply put cannot afford PGW at current market cap with PGW's debt @ $450m.
Last edited by Dr_Who; 25-07-2009 at 09:53 AM.
Having got ourselves into a debt-induced economic crisis, the only permanent way out is to reduce the debt – either directly by abolishing large slabs of it, or indirectly by inflating it away.
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Originally Posted by Dr_Who
Front end loading and related party loans.
Who the hell would participate in this company's capital raising and/or buy its shares?
http://www.nzherald.co.nz/business/n...ectid=10586446
ps: PGC simply put cannot afford PGW at current market cap with PGW's debt @ $450m.
I agree with your sentiments, good Doctor. And that's an incisive article by Brian Gaynor - it should be required reading for anyone with an interest - or contemplating an interest - in the Pyne Gould Guinness Wrightson octopus.
Unbelievably the PGC sp rose again on Friday - demonstrating that there are a lot of "old school" moneyed people in Canterbury who just seem to have blind faith in this "establishment" icon.
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Doesn't seem to add up does it Colin
here's Marac meant to be one of NZ's strongest finance house having at least $160m of impaired loans (toxic according to one commenatator) which is more than 10% of their total assets ..... and the last Marac accounts showed equity at $130m so writing these off leaves Marac essentially broke .... no wonder the hinky dory financial jiggery pokery is needed
No doubt Ker et al are pretty clever guys but ......
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