HGH - Heartland Group Holdings

[BlackPeter]

...

One option (the only option?) would be to redeem the reverse mortgages early. Doesn't sound so bad. Until you realise what it means is 'sell houses' and throw old people out onto the street!

SNOOPY

I am not a lawyer and didn't yet analyse a REL contract either. However - based on the information I have seen (e.g. a report in Consumer) does this last option not exist for the bank. The existing REL contracts explicitly guarantee the homeowner that they can stay in their house for life, no matter whether the house equity drops below the drawn loan.

It is the job of the bank to make sure they stay on the cautious side when approving the loan ... and if they err, they have to take that on their balance sheet.

[Snoopy]

The opportunity to back their strong organic growth in Australian RELs should be taken.
To miss this opportunity would not be in Heartland shareholders best interest.
I too will be voting in favour of all resolutions.

Heartland can already grow their Reverse Mortgage business in Australia by 100% (this is a conservative estimate on my part, the true figure may be closer to 150%) by doing nothing to restructure the business. 100% is quite a lot of organic growth. It would bring Australian reverse mortgages up to 20% of the loan book. Are you saying that Heartland want to boost the Aussie REL business by even more than this? To 30% of the loan book? Or 40%? That would be quite a different business mix than exists today under the Heartland umbrella.

I am not saying that Shareholders should never approve a resolution to extract the Aussie REL mortgages from under the bank structure. I am saying there is no need to do it now, or for a couple of years. The only thing shareholders will 'gain' by doing this now is to lose the supervision of RBNZ for that part of the business.

Of course where such a restructure might make sense is if Heartland wanted to buy up an existing REL loan book from another market player. But if that is what they want to do, just come clean and let shareholders know. That way at least shareholders will know exactly what they are voting for.

SNOOPY

[Snoopy]

I am not a lawyer and didn't yet analyse a REL contract either. However - based on the information I have seen (e.g. a report in Consumer) does this last option not exist for the bank. The existing REL contracts explicitly guarantee the homeowner that they can stay in their house for life, no matter whether the house equity drops below the drawn loan.

It is the job of the bank to make sure they stay on the cautious side when approving the loan ... and if they err, they have to take that on their balance sheet.

I think that is all correct BP. But remember the REL business of Australia will be taken outside of the bank umbrella. I think ASIC may have a say as to what goes on in Australia. But there will be no banking authority oversight. The securitized loan process mooted should transfer some of the any potential capital loss to the as yet unissued supporting bondholders. But it will be the job of the nobody to make sure "Heartless 'Stick it up the Ozzie Pensioners' Not a Bank Limited." stay on the cautious side when approving any loan ...

SNOOPY

[winner69]

Snoops me old mate ...you are thinking too hard about Heartlands REL activities in Oz and seeing an awful lot of things that don’t or are ever likely to exist.

Seniors Finance has been going since 2004 in Oz and no doubt the likes of APRA and ASIC have no issues with them.

Life we go on as usual whether they double their business or not ...no worries

[percy]

Seniors REL business was outside of any banking umbrella when HBL brought it.
HBL and The Reserve Bank of NZ agree the REL business should be outside Heartland Bank.
Having a business outside of the bank never affected Westpac with AGC or ANZ with UDC.
So no reason Heartland Group can not own a NZ bank, and REL businesses as well.

[winner69]

Using the new Heartland App

Bit disappointed it doesn’t give me a Te Reo option.

Utua is pay and penapena is save

BNZ apparently gives that option

[percy]

Another interesting presentation from Heartland last night.
When they first brought Seniors Reverse Equity Loan business ,they were very much aware of NZ companies failures in Australia.
They were therefore very cautious.The REL business has been an out standing success, and the growth is set to continue,particularly in Australia.
The average Australian loan is higher than in NZ,usually between au$50,000 and au$60,000,against an average RVL of 12%.They will lend up to 20% to 30% of RVL,.Nearly 70% of RELs are repaid early.Talking with Australian regulators ,any new requirements will not be an issue for Heartland.
The restructure group is to facilitate the growth in their Australian REL business.Australian REL business growth rate is much higher than in NZ,however Heartland see good prospects in NZ as well.
Heartland need 70% shareholders to vote in favour of this resolution,so if you have not already voted,please do.

[Snoopy]

Having a business outside of the bank never affected Westpac with AGC or ANZ with UDC.
So no reason Heartland Group can not own a NZ bank, and REL businesses as well.

Not sure about AGC. I know that UDC have their own board. But I believe that UDC is consolidated within the ANZ.NZ accounts. That is the reason that UDC as a 'separate entity' (sic) is not under supervision by RBNZ. So UDC is not outside of ANZ in any legal way.

SNOOPY

[Snoopy]

We can only gess at how it might work out. Ultimately, it comes down to whether you trust the directors to do their job or not.
I do trust them and have voted for the restructure, if I didn't trust them I would sell my shares.

Freddagg, I accept your position, it is legitimate, and I won't attempt to change your mind.

For others reading, I believe it is also legitimate to have shares in a company and yet not agree with everything the directors do. I myself have publicly voted against what directors have suggested (in another company), yet I still retained my shares after my vote was 'lost'. I retained my shares because I thought that the overall company direction was good, even though I disagreed about one particular resolution. I have now moved on from that particular issue, even though my voiced concern at the time has largely been proved correct with hindsight. I don't feel a 'fraudulent' shareholder because I keep holding. I think internal contesting of ideas is healthy.

In this Heartland vote, I don't believe that the issue is black and white. What Heartland directors are proposing as 'new' was the status quo anyway only three years ago. And most of the directors that voted to bring the REL business within the Heartland Bank fold are still there. IOW Heartland directors have flip flopped on this issue. At the time IIRC, the benefits of having a simplified corporate structure with only one board was mentioned. If this deal goes through there will be two boards again. Progress?

SNOOPY

[percy]

I am not a lawyer and didn't yet analyse a REL contract either. However - based on the information I have seen (e.g. a report in Consumer) does this last option not exist for the bank. The existing REL contracts explicitly guarantee the homeowner that they can stay in their house for life, no matter whether the house equity drops below the drawn loan.

It is the job of the bank to make sure they stay on the cautious side when approving the loan ... and if they err, they have to take that on their balance sheet.

As they are doing with the 104 year old in Geelong.
Good on her.....lol.