Property Finance has stopped trading!

[Scott Miller]

As of this morning PFS have suspended share trading.

As a consequence PFS are not accepting any new applications and any applications currently in the pipe line will need to be refinanced.

There will be an official update coming out from PFS regarding the matter in due course, so for the meantime please wait until this information has become available.

As soon as I hear anything more we will let you know.

[leapy]

Thank you for the update. Can you give any thoughts on the likely repercussions for property investors?

[Scott Miller]

It may mean they have put their hands in time and only require some restructuring.

I have found PFS to be a great lender to deal with and hope that the above comment becomes reality.

There is no need to panic as the book would be picked up by another lender if the worse case scenario occurred.

[Dean@Massiveaction]

This will be the biggest $*#(&$#(@ by far for investors. PFS drove the lodoc/nodoc growth. Money is about to get very hard to get!!

[BusyLizzy]

From the NZ Herald:

Another finance firm - Property Finance Group - in trouble

Look out for Monday's special section in The New Zealand Herald reviewing the state of our finance companies.

Another finance company, Christchurch-based Property Finance Group, is in deep trouble.
The board of the NZAX-listed company suspended trading of the company's shares today due to "concerns about the company's ability to manage its current liquidity position given the significant changes being experienced in the financial markets".

"Notwithstanding the continued good quality and value of its loan, portfolio directors deemed it necessary to take action to protect the interests of all stakeholders," the board said.

It said it was investigating a number of restructuring opportunities and would make a further statement on Monday.

The company was not answering calls this morning, with a message telling callers it had too many calls to answer the phone.

Stock exchange head of marketing services Elaine Campbell prompted today's suspension after she wrote to Property Finance about the concern and speculation surrounding finance companies.
"The events should give all finance companies cause for reflection," she said.

"Given the current environment New Zealand Exchange Limited considers it incumbent upon itself to write to all listed finance companies and listed companies with material finance company subsidiaries (the failure a subsidiary can (and has in a recent example) impact parent viability)."

Property Finance, formally Avon Investments, reported in its 2007 annual report it had loans receivable of $412.6 million, and cash or cash equivalents on hand of $109.2m.

The accounts showed it had debt notes of $425.9m and debenture stock of $86.6m.

This year it tried to buy a stake with in Canterbury's Loan and Building Society, with a view to a merger. CBL has assets of $180 million.

This week Nathans Finance Ltd became the fifth finance company in 15 months to collapse. It had a loan book of $170m.

Bridgecorp went into receivership just weeks ago, while Western Bay Finance, Provincial Finance and National Finance 2000 failed last year. Yesterday, the Reserve Bank took unusual steps to improve liquidity in the financial system. Pressures over the past week, reflecting a global drying up of credit after problems emerged in the United States' subprime mortgage market, had prompted the central bank to try to increase supply in the interbank market, Reserve Bank Deputy Governor Grant Spencer said.

"Pressures have persisted over the past week warranting steps to ease liquidity conditions in the interbank market," he said in a statement. "This measure is aimed solely at easing short-term interbank liquidity pressures and has no implications for the Bank's monetary policy stance," he said.

It has not pumped extra cash into the financial system during the current market squeeze as some other central banks have, but in response to demand for government securities has increased the amount of Treasury bills and short-term government bonds.

http://www.nzherald.co.nz/section/3/...ectid=10459637

[Scott Miller]

The following link is the latest from PFS

http://www.propertyfinance.co.nz/files/NZX%20Announcement%20-%2023%20Aug%2007.pdf

[Glenn]

It may mean they have put their hands in time and only require some restructuring.

I have found PFS to be a great lender to deal with and hope that the above comment becomes reality.

There is no need to panic as the book would be picked up by another lender if the worse case scenario occurred.

The media reports that they have locked the entrance to the lifts barring access from their clients.
Does not sound like a "great lender to deal with"
Not too sure about that assurance about nothing to worry about. The debenture holders have lost it and the property owners with mortgages through them might in fact have their loans on sold. The banks and other people doing that will pick up the "debts" that is what loans are called at a good discount. They are then just as likely to change the conditions of the loans. Things like term of the loan, refinace fees, perhaps new valuations, and interest rate regardless of what fixed rate you thought you had.
Poor guess work on my part, may be. Sure but it happened to me in the past with one of my mortgages and why not now.

[Gatekeeper]

This will be the biggest $*#(&$#(@ by far for investors. PFS drove the lodoc/nodoc growth. Money is about to get very hard to get!!

So, do you mean this crowd pushed out Subprime/liar loans?
Maybe nobody will want this paper?

[Dean@Massiveaction]

Don't understand your terminology GAtekeeper??
PFS pushed the trading banks into having to compete with them in the lodoc and nodoc loan areas. With them falling over it will be much easier for the main lenders to significantly tighten their lending policies. They are all bleeding with bad debt, only the smaller fry die though.

[Commercial Dan]

This will be the biggest $*#(&$#(@ by far for investors. PFS drove the lodoc/nodoc growth. Money is about to get very hard to get!!

I agree, money is about to become very difficult to get...this is not good at all as there must be more to follow.

If I had $$ in a finance company I'd be running for the door to get it out, surely everyone else is.

[Dean@Massiveaction]

Head of kiwi bank said they had over ten mil a week being deposited as people panic back to the main banks.

[Gatekeeper]

Don't understand your terminology GAtekeeper??
PFS pushed the trading banks into having to compete with them in the lodoc and nodoc loan areas. With them falling over it will be much easier for the main lenders to significantly tighten their lending policies. They are all bleeding with bad debt, only the smaller fry die though.

Thanks Poomba, that kind of explains something for me.
What I'm saying is, the debt will be up for sale shortly.
Being it is made up of what looks like a lot of sub-prime mortgages. Will anyone want to buy it?
If they have 80 million(?) in deposits, where did the rest come from?

[krispedersen]

There had been signs of this coming in the last couple of weeks. First they changed policy on their 90% low-doc and then removed their credit impaired products completely. This will close down a few brokers as well as some brokers were putting a lot of business their way and they have probably just lost their trail incomes. I've worked on both side of the fence and they stole a lot of business off other non-bank lenders because of how aggressive their product range was and how quickly they turned deals around. They promised 4 hour turnaround which probably shows how closely they were looking at the quality of their applications. This will probably mean that all non-bank lenders who were not using mortgage insurance will struggle to securitise their funds which should in effect take a few more of these products out of the marketplace.

Hate to say it but there's going to be a few more fall over. Any finance company which has loan terms significantly longer than their debenture terms could have liquidity issues

[Glenn]

If they have 80 million(?) in deposits, where did the rest come from?

What is the bet that they got a fair amount from the banks. In the past Joe average had to pay for this by paying higher interest rates.

[essence]

Financial virus spread

Smart investors are withdrawing their money from finance companies and investing it into safer main stream banks (Kiwibank for example).

Whilst no-one can ever be guaranteed that these Banks won't default, there is a lesser chance of that happening.

Less money being invested into 2nd tier companies = less cash-flow = less ability to finance/re-finance/lend = assets to liabilities uneven = company goes bust.

Not hard to understand really.

It is only a matter of time before other second tier lenders go the way of Provincial Finance et al.