South Canterbury Finance's receiver McGrathNicol has sold about NZ$123 million worth of consumer, business and rural loans for an undisclosed sum to Japanese investment bank Nomura
McGrathNicol's Kerryn Downey and William Black said the three loan portfolios, with an aggregate book value of about NZ$123 million, together comprised the balance of SCF’s “good bank” business, following May's sale of about NZ$100 million worth of SCF subsidiary Face Finance's commercial plant and equipment loans to GE Capital.
When the receivers were appointed to the previously Allan Hubbard controlled SCF on August 31 last year, SCF had NZ$1.1 billion worth of loans outstanding, net of NZ$446.2 million of impairment provisions. In April McGrathNicol said they collected NZ$238.7 million worth of SCF loan book repayments, and received NZ$59 million in inter company loan repayments, in the six months from their appointment to February 28.
Downey said McGrathNicol now only had SCF's "bad loan book" left. He wouldn't disclose its book value and said the receivers hadn't yet considered whether to continue running off the bad bank or whether to start a sale process.
Although, as with the Face Finance deal no price was disclosed for the "good bank" sale, Black said the sale represents an "excellent" outcome and was another important step in maximising the return for the Crown. The collapse of SCF triggered a NZ$1.6 billion taxpayer funded payout to 35,000 of the company’s investors under the Crown retail deposit guarantee scheme. The Crown also loaned SCF NZ$175 million to pay preferential creditors, including the Pyne Gould Corporation subsidiary Torchlight. This has been repaid with NZ$4.1 million of interest.
The Government expects losses to the taxpayer from the Crown retail deposit guarantee scheme of about NZ$1.2 billion with SCF, largely through its related party loans, making up the lion's share of the loss. The Serious Fraud Office is investigating SCF's related party loans.
Jai Rajpal, Nomura’s Head of Fixed Income for Asia excluding Japan, said Nomura, which has offices in Sydney and Melbourne but not New Zealand, wanted to reassure 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,” Rajpal said.
SCF's business loans portfolio comprises loans primarily to smaller, generally owner-operated, regional small and medium sized businesses for the likes of business expansion, vehicle plant and equipment acquisitions, working capital facilities, bridging finance, and owner-occupier property funding.
The rural loans portfolio is comprised of loans to the rural sector for the likes of land use charges and seasonal funding requirements. The consumer loans portfolio is comprised of small personal loans to consumers for specific purposes such as vehicles, home appliances, furniture, vacations and weddings.
(Update adds further detail).