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SCF loans sold to Japanese bank - English happy with progress


Tuesday 16th August 2011

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South Canterbury Finance's (SCF) receivers have sold the company's consumer, business and rural loan books to Japanese investment bank Nomura.

Receivers, McGrathNicol, in a statement today, said the three loan portfolios, with an aggregate book value of about $123 million, comprised the balance of SCF’s "good bank" business, following the successful sale of Face Finance for $100m in May.

The sale price was confidential but receiver William Black said the sale "represents an excellent outcome" and was another important step in maximising the return for the Crown when combined with other sales and loan recoveries.

However, the New Zealand Herald reported a source saying the sale price was far less than the $123m book value -- about $80m.

Timaru businessman Allan Hubbard's SCF was put into receivership last year, prompting a $1.6 billion call on the Government's deposit guarantee scheme. The Serious Fraud Office has yet to decide on whether it will pursue prosecution over SCF's failure.

Finance Minister Bill English said it was yet to be seen if the Government faced a bigger loss than the $1.2b net loss set out in the Crown's latest update, but there was no reason yet to change that estimate.

"I haven't seen the detail of this sale, but we have been focussing very much on reducing the cost to taxpayers through this whole exercise," he said.

"The receivers have got on, they've sold a number of significant assets, there's still more to go."

Asked about the company continuing to issue loans, English said that was the receiver's responsibility.

"They've been doing whatever they can to get value back for the taxpayer, and in some cases that's been about ongoing business with borrowers, and in other cases it's been about moving to recover the loans pretty quickly.

"It's up to them to maximise the value. It's pretty clear what the mandate from the Government is, and that's to protect taxpayers from any further losses through South Canterbury Finance."

English said the receivers had told the Government they had been getting "pretty good value" from the assets, given the circumstances.

Jai Rajpal, Nomura’s head of fixed income for Asia, said the SCF acquisition provided Nomura with a platform from which to lend and invest in additional opportunities in New Zealand.

The loans would continue to be managed from Christchurch, he said.

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