Hanover Finance freezes cash
Printed From: The Fishing Website
Category: General Forums
Forum Name: The News Desk
Forum Description: Our media ferret gets into the nitty gritty
URL: https://www.fishing.net.nz/forum/forum_posts.asp?TID=31154
Printed Date: 11 Jun 2026 at 3:38am
Topic: Hanover Finance freezes cash
Posted By: burwood
Subject: Hanover Finance freezes cash
Date Posted: 23 Jul 2008 at 4:43pm
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Another bunch of muppet deposit holders will take a bath. |
Replies:
Posted By: Bender
Date Posted: 23 Jul 2008 at 4:56pm
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Good to see how swiftly our Beloved Labour Government has moved to counter the downturn, minimising the impact for all the families out there. Very nice work Helen, very nice. BTW: What's it like to be on a taxpayer guaranteed salary (and perks)? Must be kinda comforting during these tough times. ------------- Nobody has ever come up with a great idea after a second bottle of water. |
Posted By: ThomasW
Date Posted: 23 Jul 2008 at 5:34pm
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That is quite surprising because they were one of the stronger companies to start with, but with all of the fear in the market people desert even from the well managed one. . Glad I have no money in finace companies at the moment. |
Posted By: Boulder
Date Posted: 23 Jul 2008 at 5:58pm
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**** thats not good. Thankfully I have what little I have in the plain low interest old fashioned BANK ------------- http://www.boulderguiding.co.nz">  http://www.boulderguiding.co.nz">www.boulderguiding.co.nz |
Posted By: Dohboy
Date Posted: 23 Jul 2008 at 6:02pm
Has the TAS finally court up to you. |
Boulder wrote:Posted By: Boulder
Date Posted: 23 Jul 2008 at 6:10pm
NO  and watch this space mate.but i do have it spread around a bit to minimize domestic scrutiny. ------------- http://www.boulderguiding.co.nz"> http://www.boulderguiding.co.nz">www.boulderguiding.co.nz |
Posted By: burwood
Date Posted: 23 Jul 2008 at 8:41pm
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Some sheet will hit the fan as our beloved tv celebrity was singing their praises only 3 days ago-directotrs knew then they were fk'd and they still fishing for some cash. Whoever runs the company should do some time and lose a few teeth. The chap has a very nice gouse on Paratai Drive. Sickening-and teh law will say ooh damn shame sorry start another next week Hanover Finance the second.
If anyone you know has money that is not in a MAIN BANK get the money out NOW! I am in the industry and many will fall |
Posted By: burwood
Date Posted: 23 Jul 2008 at 8:44pm
Do you know it was well managed. People deserting? Some people stupid may they be will lose everything-I wouldnt call any of these companies well run.
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Posted By: JK
Date Posted: 23 Jul 2008 at 8:52pm
Surpising????
 It was about as obvious as the tide coming in after 6 hours of going out.Warned my wifes grandparents to get out of that one about 6 months ago. "oh but they are offering me 10.5% interest' they said lol Hmmm you wonder why they are offering rates so high!
They are far from well managed. Risk management is the key nowadays and quite frankly they just don't have it where it counts!
Burwood - I'm in the industry too and been involved in a few of the collapses we've seen over the past 3 or 4 years. Things are in a pretty sorry state at the mo aren't they! ------------- LedgeNZ LBG |
Posted By: burwood
Date Posted: 23 Jul 2008 at 9:17pm
| JK-ringing in my ears is 'ooh the interest rates are so good' ffs are people that stupid. A friends mother 'had' money invested in a finance company so ni enquired which one and she said 'no idea my advisor does it all' good god. |
Posted By: JK
Date Posted: 23 Jul 2008 at 9:25pm
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Oh dear....... the reputation of advisors has gone too. I'd trust the fella at the bustop more than I would any advisor or broker at the moment.
I feel for those people though, the older generation who have these funds tucked away where they think it is safe as its where it has been for the past 20 years without issue and they are quite happy with the quarterly or semi annual interest payments which seem to be increasing over time for 'no real reason' at all apart from 'rewarding' them for there continued support.
It was bloody hard to twist Nana's arm and convince her to get out while she could. She rang us tonight when she had heard the news and was feeling guilty as she was one of those contributing to their downfall.
------------- LedgeNZ LBG |
Posted By: Kezza
Date Posted: 23 Jul 2008 at 9:28pm
| Some bloke on Talkback this arvo whom obviously knew his elbow from his arse (unlike Militaris) was saying that Hanover was missing 5 of the 5 principles (don't ask me what these are/where) of 'the' investment gamble that would enable a company as such to survive a down turn and bounce back with gusto.....and seemed to think there was at least another 20 out there that faired in the same light and were not looking good on the longevity front.....all a bit beyond me, but I've only just sorted out EFT POS |
Posted By: JK
Date Posted: 23 Jul 2008 at 9:42pm
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You are right Kezza (well the fella is) NZ Herald ran an article a few weeks back on what to look out for when sorting the good from the bad in the finance companies. The link is here http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10520151 - http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10520151
In regards to Hanover, yep it scored 0 out 5...
Hanover Finance: Backed by rich-listers Eric Watson and Mark Hotchin, who have shown no signs of injecting capital in the past year. The owners have withdrawn $99.8m in dividends from Hanover Finance in the past two years. Hanover is exposed to real estate development and relies almost completely on debenture funding. It has no local bank funding line and has used vulture fund Fortress Credit for funding. Hanover has a BB+ long-term credit rating from Fitch, which is not considered investment grade. Hanover has a B short-term Fitch rating, which relates to obligations of less than 12 months and under the ratings indicates a minimal capacity for timely payment of commitments.
All the signs.... ------------- LedgeNZ LBG |
Posted By: burwood
Date Posted: 23 Jul 2008 at 9:46pm
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Kezza-during the boom many lent large sums to individual projects so not diversified enough plus some rates were 17%-no issue in a boom market but the deck of cards came crashing down. If you have one large exposure that goes bust and the market gets wind of it there can be a rush on withdrawals. If the loans are many years you may not have the cashflow to repay deposits-game over. Poor risk management as JK notes. Greed and irrational behaviour coupled with lieing bastid 'advisors' who lined their pockets. the usual suspects will start another company soon enough.
To illustrate Northern Rock in the UK was a well run large mortgage provider-a hedge fund started circulating falsehoods and deposit holders withdrew 2 billion quid in 5 days-Northern Rock was a sopund comapny but couldnt cope with that. Billions were lost and some hedge funds made a killing-greed at it's worst.
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Posted By: ThomasW
Date Posted: 23 Jul 2008 at 9:48pm
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The original finance companies which went under had their investments focused around selling loans for used cars which when times got tough the default rate started to grow. Hanover had their investments mainly in real estate (admitally long term) which do not permanently depreciate in value in the same way as used cars so allowed a higher degree of certainly over the investment. When a company loans money for 5+ years but its revenue is made up of short term deposits it is a disaster waiting to happen when a run on investments occured. When you could get 10% return from the likes of South Canterbury or 8.4% from Rabo investors were foolish to keep investing when the economy slowed like it did but while the market was bullish its model had merits. |
Posted By: burwood
Date Posted: 23 Jul 2008 at 10:03pm
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It isn't as simple as saying real estate doesn't depreciate. It does if you pay to much and on a typical deal the finance company could lend 90% or hold a second mortgage.
JK-watson lives in the uk now-he took a bath on that appliance retailing chain so may need the $$ and his x wife is no doubt still caning his wallet lol |
Posted By: Moocha
Date Posted: 23 Jul 2008 at 10:07pm
Shes caning more than that if that BMW I saw her fall out of the other week is anything to go by.....bless her   |
Posted By: ThomasW
Date Posted: 23 Jul 2008 at 10:11pm
| Real estate does depreciate, but it rarely permanently loses all value. The trend is for land value to increase over time. Compared with used cars which eventually only have scrap value. |
Posted By: Moocha
Date Posted: 23 Jul 2008 at 10:20pm
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Not strictly true , seen how much some of the early Holdens and classic Fords are now going for ???? Tried to find a Holden Sandman Panel van ever ? rarer and more expensive than rocking horse shyte but then there are exceptions to every statement I guess |
Posted By: burwood
Date Posted: 23 Jul 2008 at 10:22pm
| we arent debating the mechanics of various asset classes-the point is these fk'rs knew months ago they were in poo and they went fishing for more cash. I see no difference-cars, land, gold not where is should be (ray smith). How about a cliff top house and the land falls into the sea. No depreciation you say hmm |
Posted By: ThomasW
Date Posted: 23 Jul 2008 at 10:43pm
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The EarthQuake Commission should pay out when the land falls into the sea*... Atleast for the first $100,000 worth. But I do not disagree that in rare occasion land does lose permanent value, unlike cars which lose value on most occasions. *assuming the house is insured ect..... |
Posted By: JK
Date Posted: 23 Jul 2008 at 10:44pm
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Exactly Burwood. All comes down to ethics and at this stage they are trying to act all innocent and point the finger at the public for withdrawing their debentures as a panic reaction to what is happening elsehwere in the industry.
Real estate lending is quite different to consumer finance on say motor vehicles. Whilst neither are particularly diversified lending structures, it is the credit concentration that is the issue. With real estate (especially the high risk development stuff), you may be at risk on say $700m on a particular property, if that deal goes bad then that is a huge loss for a finance company. Compare that to the effect of a few lenders not being able to pay off their cars etc and the security losing value that doesn't quite cover the loan.
Then you need to also factor in that at the moment we have a property market that is highly over valued where as the value if vehicles aren't anywhere as near as ramped up. ------------- LedgeNZ LBG |
Posted By: burwood
Date Posted: 23 Jul 2008 at 10:57pm
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Mili-the earthquake commission lol ok. I think you will find this agency protects residential owners not golf courses (in the US). Id also say the class is far from the most important-rather matching the asset quality with that of the investor. JK-no doubt the withdrawals caused problems but Hanover knew this was happening and it speaks volumes of their latest desparate ad campaign and seeing the exposure they had to 3 key failures is no real shock is it.
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Posted By: ThomasW
Date Posted: 23 Jul 2008 at 11:10pm
A "cliff top house" is typically residentail and not a US golf course. |
Posted By: burwood
Date Posted: 23 Jul 2008 at 11:24pm
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And who owns the house? A private individual? No a developer/corporate-Finance companies dont lend in the primary residential market. They lend to developers. Can we move along? |
Posted By: [email protected]
Date Posted: 23 Jul 2008 at 11:37pm
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Agree with you Burwood and JK.
Im in the industry as well and thank Faaaaaark I have never got involved with Ma & Pa investors.
This has been on the cards for ages and ages. You only have to look at the significant increase in advertising that they were pushing out on TV and Print media over the last 8 months to see the decline. They had been having a run on funds for a long long time and whilst they were hevily into the property scene, there consumer finance portfolio was in **** creek as well.
Interesting that the GM and CFO bailed from the sinking ship merely months ago.
This is not the end of it and companies like SCF will not be immune to the market effetcs.
IMHO ------------- http://www.blackbillsportfishing.co.nz/" rel="nofollow"> 
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Posted By: burwood
Date Posted: 25 Jul 2008 at 9:50am
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Watch this space-my call is an investigation is launched into how much in the way of dividends has been withdrawn by Watson/Hotchin over the last year. And whether they turned a blind eye to asset impairment which allows more dividend distribution. In other words knowingly fleeced the company coffers dry Not a good look seeing Hotchins 30M home being build-tut tut. Pwerhaps the new homeless can go and camp on his front lawn…it was the best views in Auckland. |
Posted By: [email protected]
Date Posted: 25 Jul 2008 at 9:57am
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It wont be his home of course, but a family trust development ! ------------- http://www.blackbillsportfishing.co.nz/" rel="nofollow">
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Posted By: burwood
Date Posted: 25 Jul 2008 at 10:20am
| Sure lance but I can say that the public/authorities have had enough of the super rich feeding at the trough at the expense of the ordinary Joe and someone is going to get a whipping. These guys may escape a monetary sanction but the stigma and opinion will be justice enough. Of course we dont know what went on and it may be perfectly reasonable that the owners took 100M out. Why not-you gotta eat right! And swedish models don't come cheap. |
Posted By: [email protected]
Date Posted: 25 Jul 2008 at 10:57am
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I no where you are coming from, but, as usual ! there will be a lot of talk about moral responsibilities , ethics etc from the politicians, media comentators and the like. The commerce commission will look into it and ultimatly find that Watson, Hotchins and the rest of the team have acted within the bounds of Directors Fudiciary responsibility or whatever it is termed now days and they will walk away scott free.
But, my intuition tells me that there is an agenda behind all this. Even though the Hanover brand is now defuncked and rendered useless as a markatable entity in the same market arena- The potential usefulness of the shell by the directors when run along side of their other business's is potential Gold.
To buy the investors out at a significant discount to face value and also have the long term benefits of the business as it remains + take into account the benefits that they have had financially over preceeding years and the question is then asked - What on earth have morals and ethics got to do with it
Hello :) these guys are in business. They no as well as us that it will all blow over and be forgotten about in a couple of years. Just remeber back to 1987 ------------- http://www.blackbillsportfishing.co.nz/" rel="nofollow">
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Posted By: Boulder
Date Posted: 25 Jul 2008 at 11:01am
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All very cynical but sadly for many small investors its so sadly true ------------- http://www.boulderguiding.co.nz"> http://www.boulderguiding.co.nz">www.boulderguiding.co.nz |
Posted By: burwood
Date Posted: 25 Jul 2008 at 12:07pm
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I think ive been kind there G. Anyone thing a credit rating of BB- sounds good? This is one major that caught out the public. BB- sounds pretty damn good doesn't it if you're not a savy finance type. The reality is BB- is utter rubbish and one step away from 'junk status'. Most risk averse organisations dont even touch cr*p like that. A rating of C means default is imminent. Do you think all the old biddys knew what this meant. No. I can imagine Richard Long feels like a right c*ck and is getting abused by all and sundry who think he owns Hanover lolol. A simple question to Richard Long-err did you have any of your cash tied up with Hanover? Did the directors have any money tied up-Tui ad X 2
To anyone who have lost their home I understand there is a 4300 sq metre section on paritai drive with plenty of camping facilities-just ask for the owner Mr Hotchin.
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Posted By: Bender
Date Posted: 25 Jul 2008 at 12:54pm
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According to the radio reports this morning Mr Hotchin drew $20 million out of the company this year.
------------- Nobody has ever come up with a great idea after a second bottle of water. |
Posted By: burwood
Date Posted: 25 Jul 2008 at 1:15pm
| poor chap does have a 12 car garage to fill Shane. The dividend payments going back a lot further than 6 months are questionable. And I think it will be their undoing. They won't 'get away with it' that easily. When you pay a dividend you must undertake all sorts of due diligence and discharge all number of Laws. Fundamental in this case is did the directors consider asset impairment before taking such a sum. Under Company Law you can only take dividends from 'capital' and if you take a loan provision for doubtful assets then this would reduce 'capital' which would reduce the ability to take a dividend. You will read all about this hot issue in the coming weeks. My call is the 2 shareholders cough up some capital before they get forced to by a court. And the regulators wont let this go away-not when the election is just around the corner. Bad timing for sure |
Posted By: [email protected]
Date Posted: 25 Jul 2008 at 1:32pm
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I here he also has his own Auto car wash being installed as well :) ------------- http://www.blackbillsportfishing.co.nz/" rel="nofollow">
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Posted By: burwood
Date Posted: 25 Jul 2008 at 1:42pm
lance is that a process where a gang of grannies pelt your lambo with rocks? I think he will be installing a few other features like 20 ft high gates, dog kennels for his pack of wild wolves that have been trained to attack at the mere wiff of moth balls and old wee.
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