90 seconds at 9am with BNZ: Earthquake legislation, new Basel rules & Hanover-Allied Farmers legal challenge

90 seconds at 9am with BNZ: Earthquake legislation, new Basel rules & Hanover-Allied Farmers legal challenge

Gareth Vaughan, sitting in for Bernard Hickey, details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand including news that Cabinet is today expected to approve legislation aimed at fast tracking reconstruction work in Canterbury after the big September 4 earthquake.

Ministers will brief cabinet colleagues on implications for their portfolios of the earthquake. Earthquake Recovery Minister Gerry Brownlee says cabinet will then consider temporary emergency legislation to help clear the way for reconstruction work. Vital reconstruction needed, according to Brownlee, includes repairing the sewage system. Parliament is expected to sit under urgency tomorrow to consider the legislation.

The Basel Committee on Banking Supervision decided over the weekend to introduce new rules and ratios described as the strictest since countries teamed up to regulate the global banking system in 1974. The regulators from 27 nations, including Australia, have decided banks must double their capital requirements over the next eight years as the new rules are introduced following the Global Financial Crisis.

Lenders will be forced to have common equity equal to at least 4.5% of assets, weighted according to their risk. Regulators will introduce an additional capital buffer of 2.5% to withstand future stress. Banks that fail to meet the second buffer won’t be allowed to pay dividends, although they won’t be forced to raise cash.

Critics have raised concerns the new rules will force up borrowing costs for customers and curb lending just as the global economic recovery is struggling to get going.

The Reserve Bank of New Zealand isn't a member of the Basel Committee but is being kept in the loop on developments by the likes of the Australian Prudential Regulation Authority, the Executives' Meeting of East Asia-Pacific Central Banks, or EMEAP, which is a cooperative organisation of central banks and monetary authorities, and  the Basel consultative group of smaller countries which the Reserve Bank is a member of.

The Reserve Bank says it will consider all aspects of the global regulatory discussion and will look to change standards where doing so is appropriate for the New Zealand financial system.

Meanwhile, a group of Hanover Finance debenture investors is considering mounting a legal challenge to last December’s deal that saw Allied Farmers swap its shares for their debentures, The Sunday Star-Times reports.

The investors have hired Auckland barrister Tim Rainey to evaluate legal options, and to investigate whether any misrepresentation occurred, both in the prospectus presented to Hanover debentureholders, and in statements made on investor roadshows.

Hanover's loan and property book was valued at NZ$396.2 million in December’s deal and is now valued at just NZ$94.3 million.

The deal saw some 16,400 Hanover Group investors issued 1.9 billion Allied Farmers shares valued at 20.7 cents each. Allied Farmers shares closed at just 3.4 cents on Friday.

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31 Comments

Strange.... but when ever I read about Basel 3 or whatever...I have these images of Faulty Towers and that magnificent management.

"Hanover's loan and property book was valued at NZ$396.2 million in December’s deal and is now valued at just NZ$94.3 million."

You couldn't make this stuff up!

Does anyone seriously believe that these  "assets"  were genuinely worth nearly $400m in December or that property values have imploded by 75%?

And the dicks that went along with this are now wondering if there has been any "misrepresentation"? Incredible.

Do you think they would buy any of my money tree seeds Kiwidave....!

Seriously, money tree seeds? My God, keep this under your hat! Youu wouldn't want Mom and Pop investors to get their hands on a prize like that. You are better to deal directly and confidentially to one of  the big players like "Forsyth Barr".  They have the expertise to take an oportunity like this and run with it!

Hanover investors weren't even happy the loan book was $394 million when it was stated at that.

If they were happy with that they might have jumped out of their shares right at the start.

No, no, no seems majority don't like crystallising a loss ever. They liked flashy ramped up values dished out to them in years prior. Truth never hurts anyone! They now have the truth on factual market values. Had it gone into Liquidation, result likely would have a way lower value, as buyers would take full advantage. Liquidators would just fire sale it all with little care than to be sweepers.

Sad, but facts are Hanover investors went for 3 percent or more p/a higher than banks at the time  - simply came done to human greed (I am sorry to say). Higher rates equal greater risks. Everyone knows that!

Now to hear some investors think they can reject 'their own asset values' & reverse matters. Go back to what? - their own assets that they already have shares in. Seems smarter they go the Trustees & Directors who didn't write down bad loans as they went in real time. The same guys who glossed it all up to banks, investors & Allied. I think their gusto is best pointed at the Board & Directors at the helm of HMS Hanover. Their huge salaries were paid to them to work for the good of Hanover Investors, but in fact seems they were gladly telling porkies & not at all working in the investors best interests.

Seems HMS Hanover only had a fleet of it's life rafts left floating to salvage. That was after E & M sunk (or shrunk) the big ship a long time ago. Naturally E & M stripped the gold out of it years ago, & yes I'm guessing even down to the gold plated bathroom taps. lol

You the hit the nail right on the head. They are legless, however the can start a class action against the H directors & Board for sure. Insurer beware.

speaking of Forsyth Barr and meanwhile on the other side of the city "crazy chris" lee is getting ramped up.

 

Leer is questioning the roles played by chief executive Sandy Maier and stock broker Forsyth Barr and how much they were paid in the lead up to SCF's receivership.

"Facts yet to enter the debate will follow formal answers to some highly important questions which cast doubt on the value to the taxpayer, to Hubbard or to SCF perpetual shareholders on the appointment of Sandy Maier and on the role of Forsyth Barr and, in particular, (Forsyth Barr managing director) Neil Paviour Smith," says financial adviser Chris Lee in his latest email to clients.

Maier, who has led a number of company restructures since being appointed statutory manager of the government-owned Development Finance Corporation between 1990 and 1992, was appointed SCF chief executive on December 29 last year.

Lee is questioning how much Forsyth Barr and Maier were paid for work they did for SCF.

How much Maier was paid hasn't been disclosed but Lee says: "I believe the contract paid him $5,000 per day and that a final additional payment of $1 million was held in a trust for him, whether he succeeded or not in his search for a solution."

Lee also estimates Forsyth Barr was being paid $200,000 a month to advise SCF and its total remuneration from June last year "would be nearer $10 million than $5 million." He also accuses Paviour-Smith of being "a deemed director of SCF and in may ways SCF's puppeteer."

Maier wouldn't say how much he was paid. "I don't discuss things like that," he said last week.

Paviour-Smith says he was never a SCF director and Forsyth Barr wasn't being paid anywhere near the amounts Lee estimates and wasn't being paid $200,000 a month.

While Lee says Forsyth Barr was paid 4%, or $1.1 million, for organising a $27.4 million convertible notes issue last December.

"That's not an accurate way of describing it," Paviour-Smith says. "There was a whole bunch of work we were paid for. Some of it was for capital raising." Forsyth Barr contributed "a lot of assistance over quite a number of months."

Them and Carmel Fisher in the SST.

They don't call it Vulture Capital for nothing

Interesting, most other countries with half a brain are trying to prevent losing their valuable farmland, but not us.

The worlds population is still increasing by a billion people every 12 years, bearing in mind we only got to 2 billion people worldwide in the late 1920's.

This is a serious issue that, that needs to be addressed quickly before lose too much more of our land.

The problem is we have too many immature people here that want to be PC when it suits them, and try to muddy the waters by pretending it's about xenaphobia.

Why do they think that warrior woman is involved?

Another on private and government debt and its relation to the trade balance.

http://www.frontlinethoughts.com/pdf/mwo091010.pdf

Speaking of figures. Turns out one commentator in Oz, Christopher Joye, for 'household income' appears to be using ".. the total disposable wage and investment income generated by all members of the household and should not be confused with simpler estimates of average wages or median incomes.." as his rationale that house prices there aren't over done. Trouble is, "investment income' appears to include any revaluation of house prices themselves! ie: the loans stay static; the house price goes up, so there'e more household' investment income' available to borrow against. So the median household income/house prices ratio falls. It falls though, because the house in the sums self perptuates the falling ratio!

Seems to be some desperation creeping in among those trying to keep the Aussie property bubble inflated. The commonwealth Bank's paper from last week has been well and truly taken apart by Steve Keen.

Some very "selective" use of statistics it would appear, I was shocked, shocked I tell you. Imagine, a major financial institution manipulating the truth!

 

"In order to make their point, the CBA have used the Demographia numbers as a reference point for all the non-Australian cities, yet they’ve used the UBS numbers for the Australian cities.

Why on earth would the bank do that?

Simply because if they’d used the Demographia numbers it would draw exactly the opposite conclusion to the argument they’re trying to make. The fact is, they’ve conveniently grabbed the bunch of numbers that fits their argument and discarded the ones that don’t".

http://www.debtdeflation.com/blogs/2010/09/11/overseas-investors-the-commonwealth-bank/

Dr Christopher Joye (Phd) is a governmental lobbyist .. what he doesnt disclose is what is happening - on the ground - here in Melbourne ..

There are many articles on the Property Market .. one important aspect that is never raised is this .. There is enough anecdotal evidence of many 20+ year old overseas students successfully outbidding and obtaining $2 million properties in affluent suburbs. Of itself that is not evidence of a trend. Further anecdotal evidence has been reported of groups of these properties being purchased and remaining unoccupied. What does raise questions is when more than handful of expensive houses remain unoccupied simultaneously in one street. That should be an alert. A review of the AUSTRAC website reveals that Real Estate Agents are exempt from AUSTRAC reporting which means on execution of the purchase agreement the 10 percent deposit together with the final settlement can be transferred directly to the Real Estate Agents Trust account, electronically, from anywhere in the world, all under the radar. AUSTRAC centre is an Australian government agency, established in 1989 under the Financial Transaction Reports Act 1988.

I smell a rat iconoclast...can the RE liars do the same munny scam here in Noddyland and slip the hot munny right passed Bolly nose?....who knows!

Number 6 - you have a name not a number.

I'm a prisoner.

Throw off the shackles.

no need to get too excited yet about the Basel requirements as they will be given years to comply with the new requirements. The Tier 1 capital rule will take effect from January 2015, with the capital conservation buffer phased in between January 2016 and January 2019.

Oh, I just love being registered anonymously. Such fun...

FYI, Treasury has just released this on the economic impact of the earthquake - http://www.treasury.govt.nz/economy/reports/econbrief-eice-10sep10.pdf

"...it is worth noting that the earthquake has negatively impacted wealth." Really! 

Point one:  

"Economic impact and damage estimates are highly uncertain at this early stage"

so why do they then turn out a bunch of estimates!....doh

 "GO WEST: Solid Energy has put together an offer to 1000 Cantabrians to take a break from the quake on the West Coast.
Including a scenic train trip and accommodation, the offer is also thanks to KiwiRail, Lyttelton Port of Christchurch and the hoteliers, moteliers and tourism industry of the West Coast. To apply, visit the Solid Energy website or call 0800 825 322. " herald.

Isn't that nice of them...I wonder if the 30 freeloaders the Police had to boot out of the shelter will be first to phone up for a free break....

 "The economic impact of the Canterbury earthquake will be sharply negative in the near term but probably positive for gross domestic product over a longer period, economists say." herald

Which pretty well sums up the quality of education for these 'economists'. By their judgement an even bigger earthquake would be even more positive for gdp. Mind numbing BS.

Wally, give yourself a push – be positive – a sunny warm day here in Marlborough !

Enough of bad news- most bloggers already know of. The country is in a bad shape (look Brownlee) and needs lots of  constructive, visionary ideas. 

Allied Farmers share price ( NZX : ALF ) rocketed up by 25 % on Friday . Up 44 % at one stage , during the day . I dream of such phenomenal returns . But all we get is moan bloody moan from Handover Finance debenture holders . Jeez , some people are never happy .

Back down to 2.5c~ and still down 18% on this day. One has to be quick with that speculative parcel of shares!

A bargain !........... At 2.5 cents , a mere  $ 100 gets you 4000 shares in ALF , and that should be enough to wallpaper the out-house several times  over .

Here is something interesting, and it's not about housing:

 

This Wednesday, Douglas Carlson MP (Conservative, Clacton) will introduce legislation into the UK parliament that takes the first step towards ending fractional reserve banking. As Steve Baker MP describes:

'Douglas's Bill would assert property rights over demand deposits. Real savings - term deposits - would be loaned to entrepreneurs, delivering an economy built on save and invest.'

This would have the effect of making fractional reserve banking impossible, requiring a shift to full-reserve banking (where the bank either lends your money, or keeps it safe, but doesn't claim to do both at the same time!). In plain English, it would stop private banks being able to create money as debt.