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Banksia collapse shakes finance industry

ASIC inquiry follows Banksia collapse

GEOFF ADAMS November 6, 2012 4:02am

Former managing director of Banksia Securities, Pat Godfrey


The Banksia Securities collapse and the subsequent failure of another associated company has sent shockwaves through the financial services industry.

The Australian Securities Investment Commission has launched an inquiry, the Rural Finance Corporation is offering information on a hotline and organisations including Campaspe Shire Council have offered support for investors.

Banksia Securities was placed in receivership on Thursday, October 25, after the company sought help fearing it was insolvent or about to become insolvent, and more than $600million in investor funds were frozen.

The receiver, McGrathNichol, has suggested investors could receive a ‘‘meaningful’’ return on their investments, but they say it is too early to say what that figure will be.

Rural Finance Corporation has offered to take calls from regional people affected by the Banksia collapse on a hotline. Corporation chief executive Rob Goudswaard said last Friday they had received a modest number of calls.

‘‘About 90 per cent of the calls are making sure they understand the facts and clarifying the position of debenture holders,’’ Mr Goudswaard said.

One call required a reference to a counselling service.

Mr Goudswaard said investors may have become more comfortable with the Banksia companies because they developed in the region and had been well known for some time.

However, he said a common rule for investing was that higher returns were usually accompanied by higher risk.

‘‘Some people will go for higher returns and may not appreciate the risks.’’

Banksia was founded in Kyabram and over the years has attracted large investments from the rural and farming community in the region.

In the last financial year, the annual report records Banksia had a total of $691million in assets and $666million in liabilities.

Auditors signed off on the accounts on September 27.

Banksia office holders were: chairman Peter W. Keating; managing director Patrick J. Godfrey; directors Nicholas L. Carr, Neil S. Mathison and G. Grenville Skewes.

Mr Godfrey is no longer managing director but remains a director.

Geoff Adams holds a small investment account with Banksia Securities.

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