Kiwibank facing loss on its NZ$7 million Don Ha Real Estate exposure

Kiwibank facing loss on its NZ$7 million Don Ha Real Estate exposure

Kiwibank, which earlier this year reported a big drop in interim profit as bad loans from unsuccessful business lending jumped, is facing a loss on the NZ$7 million it lent to Auckland's Don Ha Real Estate and associated businesses.

Kiwibank pulled the plug on the realtor and property manager, run by former Vietnamese refugee Don Ha, on March 17 appointing Grant Thornton's Tim Downes and David Ruscoe as receivers. The state owned bank had a general security agreement with the company, to whom it had made "various" loans, Grant Thornton says in its first receiver's report. The receivers were appointed after a default on the loans to Kiwibank.

"Since our appointment we have disposed of the business and fixed assets of the company, realising NZ$1.35 million," Downes and Ruscoe say. Of this, NZ$1.2 million has been repaid to Kiwibank.

The receiver say Kiwibank was owed NZ$7.06 million at the time of its appointment. This comprised NZ$154,991.31 owed by Don Ha Real Estate and NZ$6.9 million borrowed from the bank by the wider Don Ha Group that the realtor guaranteed.

"Based upon the information available it is unlikely that the general security agreement will be paid in full from proceeds arising from the receivership of the company," Downes and Ruscoe say.

They also say they are verifying whether they can collect NZ$2.5 million due to Don Ha Real Estate from 15 related parties, including some that have ceased trading.

In February Kiwibank said its profit for the six months to December 31 fell 41% to NZ$13.9 million from NZ$23.5 million in the same period of the previous financial year as bad debt provisions more than doubled. The bank's provision for bad debts jumped to NZ$45.5 million from NZ$19.5 million with CEO Paul Brock saying these were largely unsuccessful business investments.

Ha, a prominent property investor, real estate agent and seminar promoter, was reputed to have been worth NZ$60 million before the property bubble burst in 2008. When Don Ha Real Estate was tipped into receivership Ha said management controls at the firm were weak and his bank didn't understand his position.

"Without going into too many details it came to my attention recently that some of the management controls and reporting systems employed by Don Ha Real Estate Ltd weren't what they should have been," Ha said.

"I am confident that the bank which put me into receivership doesn't have a true understanding of my position. I wish they had communicated with me more before taking their action because this could have been avoided," he said, adding there was no reason for anyone connected to the business to be worried and it was "business as usual".

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7 Comments

Sorry Muppet King, had to pull your comment. Please keep this in mind from our paragraph on comments above: "We don't welcome abusive or defamatory comments."

Sorry Gareth, will keep that in mind when I comment from now on.

The Muppet must have popped his cork....let's hear it for the Kiwibank bosses who made these fabulous investments...I spose they or he left with a fat bonus....no worries though...tis only a matter of raising the floating rate a tad and clipping the depositors at the same time and hey presto up pops some fat profits....gotta be good for fat pay rises for the bosses too.

Where are all the screaming socialists who demanded a state owned bank...suckers... 

"... the main asset realised was Don Ha's property management business which he has sold back to Ha after family and friends contributed money."

Whilst I realise that the recievers have to sell to someone, I'd have thought 'the family money' could have gone to the recievers in addition to selling the business to an unrelated party.

But, hey, there's a bit of supply coming to the starved Auckland market! "To make up Kiwibank's $5.8 million loan repayment shortfall, Downes predicted Ha would be forced to sell the big South Auckland residential portfolio he has built up. "

Me thinks Ha will be going "he he"  and Kiwibank will discover they can't touch Ha or the loot.

Wolly, I think the only noise I can hear is HeHaw HeHaw coming from the $2,000,000 yearling that Kiwibank, sorry Don bought at Karaka in 2007. I was at the sale and after purchase Don was pictured with Sir Patrick Hogan and the yearling. Don had arrived big time and Sir Patrick had the money yet again. So funny watching the game being played. Never heard if the horse made it to the track or if it ever won a race. Cheers

In the latest receiver's report, out today, Grant Thornton has reiterated that Kiwibank has only got NZ$1.2 mln back and is unlikely to be repaid its NZ$7 mln in full.