KEY POINTS:
Listed financial services business Pyne Gould Corporation picked one of the most tumultuous days since the Great Depression to launch plans to become a domestically owned, publicly listed bank.
As markets panicked and banking stocks around the world tumbled, Pyne Gould managing director Brian Jolliffe admitted he would
not have picked yesterday as the best day for such an announcement.
"At the end of the day over the last 18 months I don't know whether there ever has been a good day to announce we're doing this," Jolliffe said.
Pyne Gould was obligated under listing rules to tell the market of its intentions and planned to lodge an application with the Reserve Bank this week or early next week.
"We really see ourselves coming under the highest governance structure for scrutiny and transparency in New Zealand ... and we think that provides a lot more confidence to our investors and borrowing customers."
The company did not plan to open roadside branches, with existing financial services businesses Marac and Perpetual forming the core of the new bank.
"This restructuring into a specialist bank will enable these businesses to better meet the needs of their customers by offering financial services to both small- and medium-sized businesses throughout New Zealand and also specialist personal banking for individuals," Jolliffe said.
"We will not duplicate the broader activities of the other mainstream banks."
Pyne Gould would review ownership of non-banking assets, including a stake in listed rural services business PGG Wrightson, which had been 22 per cent before a recent capital raising by that company.
Shareholders identified with the fact that Pyne Gould had been in the rural services business for 150 years, Jolliffe said.
"What we know here is that if you wanted to be a registered bank then the requirements of the act require you to have assets and services that are of a banking nature."
One option was to distribute the PGG Wrightson shares to Pyne Gould shareholders over time in lieu of dividends.
Jolliffe said becoming a bank was a watershed moment and would not alter the risk profile of the company.
The company lent only on New Zealand businesses or assets and served New Zealand customers. "It is not going to be any different tomorrow for our business than it was yesterday.
"We think it's a watershed moment for the New Zealand Stock Exchange as well to have a publicly listed New Zealand bank on the market."
First NZ Capital analyst Jason Familton said the marketing potential from a greater regulatory environment was probably the key benefit.
Pyne Gould shares closed down 15c yesterday at $3.15.
BANK ON IT
* PGC has announced a plan to become the only NZ-owned publicly listed bank.
* Becoming a bank will put the company under the highest governance structure for scrutiny and transparency.
* The company aims to provide more confidence to investors and borrowing customers.
* The specialist bank would not duplicate the broader activities of other mainstream banks.
NAME STAMPED ON HOLDINGS
South Canterbury Finance is putting its name on 13 regional subsidiaries, to raise its national presence and boost investor confidence.
The 80-year-old company has flourished during the finance sector turmoil, increasing its assets by over 20 per cent last year to $2 billion, and experiencing healthy reinvestment rates.
Awareness of the many subsidiaries was quite low and often lending customers did not associate the subsidiary with South Canterbury, said chief operations officer Peter Bosworth.
It was also cheaper and easier to run one brand than 13.
"The regional identities of our finance companies have served the company well as local providers of finance for business, rural, property and personal lending," he said. "Now, the opportunity is to use 'a brand new very old name' to further drive our position as one of New Zealand's leading providers of finance for funding customer growth."
The names of the 13 regional subsidiaries will disappear, except for Hawkes Bay's 75-per cent owned Kelt Finance, which will continue trading under its existing name. Majority-owned plant and equipment-focused FACE Finance will also retain its separate identity.
Customer documentation and other terms of their contracts would not change, and it would be a "seamless" change for staff as well, Bosworth said.
South Canterbury is the 11th largest among all banking companies, and the second-largest finance company behind UDC, by total assets.
All regional subsidiaries predated the finance company problems of the last few years, and South Canterbury was not actively looking at purchases, Bosworth said.
"It's pretty hard to do an accurate due diligence on any assets, and by focusing on slow and steady organic growth you end up with the right staff, the right lending customers and you know what you're getting."
South Canterbury's strength was in its diversified business by region and across sectors including rural, plant and equipment and business lending, as well as consumer and property.
Bosworth did not expect too much more disruption in the finance company sector, and no more large failures on the horizon.
- NZPA
