Lender collapses, leaving investors at risk

by Robin Christie29 Oct 2012

An Australian financial group has been labelled “insolvent or likely to become insolvent”, with $660m of investor funds being put at risk.

Banksia Securities Limited (BSL), is now under the receivership of McGrathNicol, which was brought in by BSL secured creditor The Trust Company (the Trustee) following fears surrounding the group’s solvency situation.

The receiver appointment was made on the back of a request from BSL’s board.

According to a McGrathNicol statement, BSL owes approximately $660m to investors, and advanced these funds to borrowers primarily to finance real property purchases. BSL holds first ranking real property mortgages to secure its advances.

“Control of the business and the assets of BSL rests with the receivers and managers who will be working in close consultation with the Trustee to ensure the interests of debenture holders are being protected,” said the statement, which added that interest payments and redemptions have been frozen as at 25 October 2012.

“We are in the process of conducting an urgent review of BSL’s financial position, loan book and underlying security properties. Our primary concern is to ensure the interests of debenture holders are being protected. In this regard, we will be working closely with the Trustee to ensure debenture holders receive regular communication and BSL’s assets are managed in a manner to maximise returns,” said receiver Tony McGrath.

“The Trustee has acted on the Board of BSL’s request to appoint receivers and managers. We will focus our attention on ensuring debenture holders are treated fairly and equally. We will communicate with debenture holders openly and will act in their best interests throughout the receivership,” added The Trust Company group executive GM corporate client services David Grbin.

A circular sent to BSL investors stated that interest payments and redemptions have been frozen as at 25 October 2012.

“This means that at this stage, you will no longer receive regular payments, nor will your investment, including any interest reinvested or accrued up to 25 October 2012, be returned to you on its maturity. We will notify debenture holders if this situation changes,” said the circular.

“We are presently calculating the value of your investment to the date of our appointment and will provide those details as soon as possible.

“At this early stage, timing and the amount of any dividend is uncertain and is dependent on the realisation strategy adopted by the receivers and managers.”


  • by SDS 26/10/2012 12:00:28 PM

    I just hope that fear does not now provoke the public to cause a run on LaTrobe and other mortgage trust operators.

    Some of those are only now returning capital after shutting down during the GFC.

  • by Pfft 27/10/2012 5:02:48 PM

    These guys wrote too many dodgy low doc loans.
    Their loan book is over 10% 90 days plus in arrears. You only get a book like that when you prey on borrows that cannot afford their loans.

    Good bye. Wish ASIC would take a closer look at the past applications and the brokers / lenders who wrote them. See how they ended up with so many in arrears...

  • by Country Broker 29/10/2012 10:57:59 AM

    HMMM a lot of speculation here . There were a god lender with a stromg balalnce sheet , as to Lo doc loans I couls NEVER getthem to look closley at them .

    More to the point they werer good solid country lenders who operated on lower LVR'S and had a really good book of dairy farms and irrigated farms , over the last few years they started to lend more and more in Melbourne on commercial property and smaller developments and also into other areas , lost their basic area of operation and expertise that held them in good sted for so long .