Member log in

Global bank buys $123m SCF loan book

South Canterbury Finance receivers have sold another chunk of the failed lender’s business but the return to the taxpayer has been kept confidential.

Japanese investment bank Nomura has acquired South Canterbury’s consumer, business and rural loan portfolios – the last of the so-called “good bank” of assets.

The three loan portfolios have a combined book value of approximately $123 million, receivers Kerryn Downey and William Black of McGrathNicol said in announcing the deal today.

However the actual purchase price was kept secret.

Mr Black said the sale represents “an excellent outcome and is another important step in maximising the return for the Crown when combined with the other sale processes completed to date and loan recoveries made during the receivership.”

There has been speculation in the market that Nomura paid about $80 million for the loan book, or about 70c in the dollar. Other sources have suggested it was sold for as little as $35 million.

Mr Black dismissed the speculation.

“The price is confidential. But that figure you just mentioned is wildly inaccurate,” he told NBR.

He said there would be more transparency around recoveries when the next receivers report comes out in October. 

South Canterbury Finance was tipped into receivership last year, triggering a $1.7 billion payout on the government's deposit guarantee scheme.

In April the government said the net cost of retail deposit guarantee had been raised to $1.2 billion from an earlier estimate of about $900 million, mainly due to lower than-expected recoveries from related party loans at South Canterbury.

This latest sale represents the last of South Canterbury’s more saleable assets and follows sales of Face Finance, Helicopters NZ, and shares in Scales Corp.

Once third party debts are stripped out the four asset sales have brought in about $360 million, although Mr Black would not give a figure.

He said it was important to realise that recoveries had also come through loan repayments.

In April the receivers said they had recovered $299.69 million in receipts, including $238.7 million of loan book realisations.

Collections came from scheduled principal and interest instalments, early repayments and settlements.

A further $59 million of intercompany loans were recovered.

However, there have also been plenty of outgoings including new loan advances of more than $50 million under new, more stringent lending criteria.

Mr Black said he was comfortable with where the receivership was at after one year.

“I’m not privy to whatever provision the government has made but we’re certainly on track. Our role is to achieve best price we possibly can.

“We’ve got four significant transactions completed in 12 months. We think it’s a pleasing outcome and we're going to keep progressing as efficiently as we can to finish off the receivership.”

Remaining assets included South Canterbury’s bad bank, made up of mainly property loans that could take another two years to work out, and the sale of South Canterbury’s stake in Dairy Holdings.

The latter is complicated by legal action taken by 16.7% Colin Armer, who has alleged underhand tactics by McGrathNicol.

Smaller deals include the recent sale of Financial Synergy Limited.

The receivers are also close to finalising a sale of Commtest Instruments, a Christchurch technology company that uses vibration technology to monitor machinery.

NBR understands there is some litigation to be settled in the US but a sale is expected to be completed soon.

South Canterbury sunk nearly $27 million into Commtest, with outstanding loans at the time of receivership approximately $15 million on top of a $12 million equity investment.

Mr Black said the good bank initially attracted 90 bidders and was eventually weeded down to five final offers.

Deutsche Bank AG New Zealand branch acted as sole financial advisor to the receivers.

Nomura’s head of fixed income in Asia Jai Raipal sought to reassure South Canterbury’s underlying borrowers and businesses that their loans will continue to be managed from Christchurch.

“This acquisition provides Nomura with a platform from which to lend and invest in additional opportunities in New Zealand, which has a robust, well-managed economy,” he added.

South Canterbury is subject to a Serious Fraud Office Investigation of certain related party loans while former chairman and majority shareholder Allan Hubbard faces 50 charges laid by the SFO in relation to separate companies Aorangi Securities and Hubbard Management Funds. 

More by Duncan Bridgeman

Comments and questions

$1.7b taxpayer owed
$421m gross sales
Nett ?????
Where is the other $1.3b ?????

Sold for $35m. What a bargain.

I heard $35.5m

$35m buys ALL of the 'bad bank'

Where else do you think it went? Sandy sold the loans at huge discounts ($600m worth and mostly to his mates!).

Sandy Maier has a lot to answer for - also the FMA should be looking closely at what he stated to investors - regardless of the fact that the Government paid them out.

Hubbard was the problem, Sandy Maier was just trying to rectify a situation that was unfortunately already rotten to the core. Bill English should have taken the Saville deal and none of us would be too worried about this

Don't think so pal - that sale didn't go through. better check your facts or otherwise go back to worshipping at your Hubbard shrine (Hubbardites always seem to blame everyone else first). Just a shame Mr Maier didn't get in there earlier and kick Hubbard out before the posion seeped into the core...ah well i guess the SFO will sort him out

Disagree you clearly are Mr Maier as no one else would stand up for his performance on SCF or Geon or anything else. The facts are he heavily discounted loans to further the myth that SCF viable and convince retail investors it was a good investment when it was not. Why is Mr Maier and other directors getting a hard time about continuous disclosure from the NZX?

This is no-one's fault but Hubbard. That guy has cost us taxpayers more than any person in NZ history unless I'm missing someone else who's cost us a few billion... reported $80m sale price but this is MILES wrong. It is $35.5m.

Sandy is under investigation by the FMA for incorrect statements to the NZX and for "loan transfer documents/sales process" in 2010. Looks like he is screwed.

if so i would have thought the FMA have better things to my experience Sandy is a good person and an excellent director (and NZ has very few of these). meanwhile the Strategic/Hanover directors party on...

if the price was really only $35m then it says something about the quality of the loans at the time they were made. presumably Lachie Mcleod and Hubbard would have overseen those. Nomura looks like it might make a killing out of their poor loan management. can't see how Maier can be blamed for that

Hubbard ran the show, and has already been put up for charges for running it poorly. BUT Sandy sold good loans at huge discounts while informing the market they were breaking even. If you look at the documents the government released you will see what he has done.
Oh and i too heard that the FMA is looking into his behavior while running SCF

Makes a micky of how SCF tried to keep the company "alive" - Think about all the loans they would have made over the past 12months, only to be discounting them. I agree with your words "prick" - They all are.

Bill English and Nats wanted to buy South Island votes and thought $1.7b was good value

Thats about $1500 per SI resident excluding sheep

Was Sullivan the lawyer a director of SCF??????

Word is... Maier and the other 'board members' have government IMMUNITY for any of their actions in relation to SCF... whilst controlling the bank account for nearly a year before SCF was shut down... think about that amount of power and unbridled control as wonder there were so many hushed 'board meetings' behind Allan Hubbards back... absolute control of hundreds of millions of dollars in cash flow, with government immunity for any wrongdoing ...
all at taxpayers expense... WHY?

because Hubbard screwed up so badly they were desperate for someone sensible to come along to help them out? makes a lot of sense actually

how on earth did SCF get an extension to the guarantee????????Why does Pike river get an inquiry and the taxpayer bailing out SCF only gets "an excellent outcome..." on the road to realisation which represents, quite simply, a Billion$1.2 (and moving upwards) shortfall. How can this be a satisfactory outcome for taxpayers when there was apparently little reason on financial stability/economic/systemic grounds for the rescue of SCF

Sandy was a director of Equitable and that fell over as well so not sure of the skill level, earning level pretty good thou??

Hubbard did not do all this damage alone, that rat bag of a lawyer O'Sullivan was ALWAYS at Hubbard's side carrying his brief case and making the legals right as smart lawyers do.He is 90% responsible for this major stuff up in silly old TIMARU where they still believe in HUBBARD, what more can we tell them now ???? Any street matches lately to raise funds for Hubbards legals or will O'Sullivan pay for them.It is all a total DISGRACE.

The $1.3 billion loss was always expected. No surprises there. The big surprise is that no Australasian financial institutions stuck up their hands - and they are the ones who will know best the quality (or lack thereof) of the loans.

The bad bank must be worse than Maracs bad bank. nothing short of a disaster.

The news of the day is Watson and hotchins involvement with digitech

so more money leaving country as when the loan are paid off.

It all been to take control of south island finances.

but of course who will been winner when he leave parliment as he promise to do if not vote back in top job in november

It all been fit up from the start. See how they break the country.

Well done John and Bill. the country will be worst again as that more money out kiwi economy.

Who on earth is sticking up for Sandy? That MUST be Sandy himself. I have spoken to many financial institutions who laugh at the name Sandy and would never touch anything he is involved in. I too heard that Maier is being looked at. Reporting to the market that they are "breaking even" and "no more bad debts" etc etc... Whoever bought those preference shares by listening to him should sue him.