Receiver Tony McGrath told Banksia debenture holders his views on the business' collapse in October. Many investors at Kyabram on Friday were keen to know what happened to their money.TRENT HORNEMAN AND MONIQUE PRESTON December 17, 2012 4:30am
Receiver Tony McGrath highlighted key reasons behind Banksia Securities’ demise.
Mr McGrath said Banksia’s problems could be traced to the Global Financial Crisis in 2007.
‘‘Serious long-term over-valuing’’ of assets was at the heart of the collapse, with Banksia Securities not having enough cash to cover its loans.
He said the GFC had impacted on property values and ultimately Banksia Securities’ financial strength.
‘‘This is difficult because of the nature of the people who are exposed to the company are hard working country people who effectively dealt with Banksia as if it were their local bank,’’ he said.
‘‘This is a complex situation, the issues with Banksia is that it is a finance company, but it is at the high risk end of the banking or the lending community.
‘‘We are now in the fifth year of the GFC and the type of lending that Banksia did was to lend funds to borrowers who were investing in property. Property is a sector badly hit by the GFC, especially in areas like country Victoria.’’
Mr McGrath said directors and auditors did not account for the drop in asset value.
‘‘The focus goes back to the GFC, three to five years ago, the reality is their lending practices have not kept pace with changing market conditions for the assets they were lending on,’’ he said.
Mr Mcgrath said Banksia’s acquisition of Statewide Secured Investments in 2009 could also have led to the demise.
‘‘The Statewide transaction was the outcome of two poor balance sheets coming together. My experience of that is that when you put two weak endings together you get a worse outcome than if it were separate,’’ he said.
‘‘Does that mean directors have breached their responsibilities in acquiring Statewide? I’m not sure.’’
Mr McGrath said he was still investigating how Banksia Securities reported a profit of $24
More than 600 Banksia Securities debenture holders crowded into the Kyabram P-12 College hall on Friday morning.
Fans whirred to keep the temperature down, but discussions, at times, still became heated.
The investors were there for the same reasons — to find answers.
They wanted to know how much of their money invested in Banksia Securities would find its way back to their wallets.
They wanted to know who was responsible.
The hall was packed as Tony McGrath, a partner of receivers McGrathNicol, addressed to the crowd, before opening up the floor for questions.
The directors of Banksia Securities and auditors who gave the company a clean bill of health mid year came under fire.
McGrathNicol also faced criticism from some, who believed the receivers had been ‘‘money wasting’’.
There was an audible gasp, followed by a collective murmur, when the audience was told $1.3
The receivers were also criticised for instances of late letters and over a glossy report sent to debenture holders.
One person asked: ‘‘would it be better not to spend our money on glossy magazines?’’
The audience clapped in appreciation.
Outside the meeting views were mixed.
Most said they were happy to hear the auditors could face legal action, while there were divided opinions outside about whether the directors should be held accountable legally.
One person said the fact a new person with a banking background had stepped into the chief executive role mid year, had probably been a ‘‘lucky’’ move for debenture holders.
‘‘Because (otherwise) we could have lost the lot. We’d be here with shotguns,’’ he said.
Another said the directors had much to answer for.
‘‘I have been a director of a company and the first thing I was told was that to make sure we did not trade while insolvent,’’ he said.
‘‘I can’t see how the directors could go from a $24
Another man said many people who had money with Banksia Securities were not chasing big dollars, but investing in a local company that had been around for close to four decades.
One man said he was pleased to hear receivers would not be having a ‘‘fire sale’’ to get rid of loans, but instead hold out for good prices.
Murray Football League is looking to continue its interleague revival after announcing its squad for the AFL Victoria Country Championships.
The last day of racing before the lake lowering produced results that reflected the skills of the most capable sailors.
Greater Shepparton City Councillors have voted in favour of a new land subdivision in Tatura.
Wayne Hamilton will umpire senior football game number 504 on Saturday, setting a new Goulburn Valley Football Umpires’ Association record.
Rochester’s female business heads met Member for Murray Plains Peter Walsh on Thursday to discuss businesses and community issues in the district.
Biggest Morning Tea facelift
Nagambie and Avenel ratepayers unhappy after learning Strathbogie Shire Council's new plans for rubbish collection.
Although Tocumwal's Dan Ryan is in Nepal, he was not in the path of the disastrous earthquake.
The 2015 Harold Baigent Memorial Art Exhibition was a big success for Heathcote Lions Club on the weekend.
Popular Cobram tourist area Scotts Beach will now remain open to campers during a 12 month consultation with Parks Victoria.
The first round of Deniliquin Netball Association’s winter competition on Saturday brought warm weather and eager netballers.
The University of Melbourne’s 2000 ha rural property at Dookie will be profitable and serve an important role as a teaching and research site, the new farm committee chairman said.
Discover unbelievable local deals from local businesses every week in the Goulburn and Murray Valley area with Leapon.com.au!
Search properties for sale or rent across North Central Victoria and Southern NSW. Visit your local website for local homes....
Search for published and unpublished photos from McPherson Media Group newspapers and magazines. All our photos are available to purchase.
Place an advertisement in any one of McPherson Media Group's local newspapers.