90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: D-Day for SCF; SFO decision on Hubbard due too; Bernanke talks at Jackson Hole

30th Aug 10, 8:57am by Bernard Hickey

Bernard Hickey details the key news over the weekend in 90 seconds at 9 am in association with Bank of New Zealand, including news the cabinet will consider a recapitalisation plan for South Canterbury Finance later today that may include some form of government backing.

Without this plan, South Canterbury is likely to be in receivership by the end of tomorrow at the latest.

The option understood to be before the government is for the government to buy South Canterbury's bad loans, the so-called bad bank, which would allow the new owners to recapitalise the 'good bank'.

BusinessDay reports that Sydney based investor Duncan Saville, who is Infratil's largest investor and is involved with potential Allied Nationwide rescuer Resimac, was the bidder behind the recapitalisation plan before the government.

However, Allan Hubbard told Patrick Smellie at Business Desk the Treasury had recommended the government not go ahead with such a 'bad bank' purchase. Finance Minister Bill English was cagey in an interview on TVNZ's Q&A on Sunday, as was Prime Minister John Key on TVNZ's Breakfast this morning.

Meanwhile, supporters of Allan Hubbard say PricewaterhouseCoopers has prepared a report on Hubbard Management Funds and Aorangi Securities that differed with the one provided by Grant Thornton. It said the funds were well managed. PwC could not immediately confirm if such a report had been prepared.

The Serious Fraud Office is expected to decide this week whether to lay charges against Allan Hubbard.

Meanwhile, US Federal Reserve Chairman Ben Bernanke spoke at an annual gathering of central bankers at Jackson Hole in Wyoming. He said the Federal Reserve would use further 'unconventional measures' to bolster the world's largest economy if the situation deteriorated significantly, Bloomberg reported.

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15 Comments

by andyh | 30th Aug 10, 9:03am 1283115838

I see Hubbard was falling back on the 'I am an old man stop being so mean to me' defence at the weekend. He certainly seems to have the ability to get the broadcast media to run some pretty uncritical pieces about himself - mention of the dodgy dealings oulined by the stat.managers on TVNZ3 news was provided almost as an afterthought.

by Wolly | 30th Aug 10, 9:04am 1283115899

Wood anyone!....

."'The downward price movements in engineered wood products will continue to place competitive pressure on solid hardwood timber and steel products in high strength commercial and residential construction,'' URS said. There was no sign this downward trend would abate. Prices had been falling since mid-2008. ''This is spurred on by increasing imports of engineered wood products from the northern hemisphere,'' the consultants said.....

But I thought the price of wood was going up...and up...so if the above aussie report in The Age is correct, how come the price of building timber in Noddyland is rising......

by powerdownkiwi | 30th Aug 10, 9:22am 1283116942

Wolly - goes against the grain. Knotty problem.

by Wolly | 30th Aug 10, 9:38am 1283117883

You don't think somebody has been telling porkies do you?

by powerdownkiwi | 30th Aug 10, 9:41am 1283118085

Couldn't see the wood for the trees?

by Rob of the North | 30th Aug 10, 9:59am 1283119192

Wally/Wolly always was a knotty boy at school.

listening to john key today on various media and reading between the double-speak, i would say that the govt. is going to rescue south cant.fin.

in what way i'm not sure but they ain't going to be going down the gurgler.

however, i'm not sure i'd be too comfortable if i had more than the 250K limit invested with them as that's the cutoff point for the govt. g/tee

by andyh | 30th Aug 10, 10:18am 1283120314

The 250K is the cut-off in the extended guarantee - which doesnt come into operation until October.

If they went into receivership now they would be covered by the original guarantees limits (I think $1million?)

by Rob of the North | 30th Aug 10, 10:03am 1283119433

Prime Minister John Key side-stepped the issue on TVNZ’s Breakfast programme this morning.

He reassured debenture investors that their money was safe under the guarantee and would be repaid in the event of a default.

The government had provisioned $900 million as a potential loss to the finance company sector.

"No one can argue the tax payer hasn't stepped up," Mr Key said.

The government also wanted to minimise any loss incurred by the Crown, he said.

“If there is to be a loss and be paid for by your hard earned tax dollars we want to make sure that its as smallest loss as possible,” Mr Key said.

“In terms of what happens from there ... I'm not going to comment on that today."

by David George | 30th Aug 10, 12:16pm 1283127381

Please somebody explain where all this missing money has gone?

It's gone to money heaven, same place it came from.

by Christov | 30th Aug 10, 10:09am 1283119763

Wow....this has got the blood pumping.... what a curly one John Boy...!

You are indeed damned either way.

As I said the other day the outcomes one way or the other will be affected by a measure of ...........intent......... to defraud by Hubbard through a network of dealings.

Irrespective of academic opinion the face saving exercise will become more important than the collapse itself..... and in that I say the SFO are working their nuts off looking to expose ............(or cover) the trail of the tape.

Being seen to have done due process prior to today's announcement will have been crucial ...or they (the Govt) may even use this a a stall and gauge tactic.

My money say's that if the sheet is clean on......... intent......... they will bail it with a( Proviso) that may include some interesting clip ons.

by Snarlypuss | 30th Aug 10, 10:36am 1283121362

"...Bank (of England) Deputy Governor, said “direct constraints” may be needed to restrict access to credit, and that homebuyers could be forced to put down sizeable deposits before being granted a mortgage by their banks..". Coming to us, and all peoples, in due course.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/7971097/Bank-plans-to-cap-risky-mortgages.html

by Learn to Socia… | 30th Aug 10, 11:48am 1283125722

Why are we so good at rounding up shoplifters and punishing them- but are so ambivilent about white collar million dollar theft? We are famous for our lack of corruption. Let us show the world that we are not a corrupt society. Just saying that we are a fair society, over and over and over and over does not make it so.

by alex | 30th Aug 10, 12:35pm 1283128521

Fair society-Whats fair?I invested some years ago in an Aus company that turned into Allco FinanceAFG-was of good report until the financial meltdown then like everything else became a house of cards.Now have the paper but no money..Seemed cruel to me ,but not unfair,except that banks and finance companies (and their investors ) have been guaranteed with our money.JK is showing largesse with our money to a comparatively few investors,is that fair?

by Wolly | 30th Aug 10, 1:14pm 1283130884

Where you been simbit...did you take my advice and invest in Provincial Official New Zealand Investments?

by powerdownkiwi | 30th Aug 10, 12:03pm 1283126606

A mover and shaker sh.tting on a mover and shaker? It's a funny thing, they do it daily as part of the game, but close ranks when the game is threatened.

They're all guilty of trading in deckchairs on a sloping deck.

I used to target particular villains, but as I get older, I realise someone would have occupied the particular position, and it's the game per se that 've come to abhor.

So I see no difference between Timaru and Dipton. Or Epsom.

Time we invented a sustainable game - which means one not requiring continued (physical, at least) growth to keet the music going.