Thursday, July 24, 2008

Hanover Collapse: It was just a matter of time

In a post I wrote on October 5 , as part of the 2007 Friday Free for all series, I had the following story about the impact of Finance companies falling over. Hanover was picked as one of the dodgy ones.

If you were watching the TV over the last few weeks you would have noticed that the saturation advertising the Hanover was running had stopped. That is because they were insolvent.

This will not be the last one to go. All prospective investors in finance companies should be very wary about putting their hard earned dollars at risk.

Think seriously about not reinvesting if you already have money in this sector. Try a term deposit instead.


Financial Impact-from Share Investor's Friday Free for all: Edition 6

The fallout from the dodgy finance company industry rolls on again this week.

Hanover Finance, one of New Zealands biggest finance companies is to cut its Australian staff from 44 to 32.

Hanover has been busy re branding itself with an expensive advertising campaign as a warm , friendly, safe and solid industry player.

I'm still a little wary over this and other companies and their long term future in lending.

Even Hanover's size wont protect it from going under and there are rumours going around about its stability.

Even the State Kiwibank, the loss making division of NZ Post, has reportedly done 6 million taxpayer dollars in the Northern Rock collapse in the UK. One has to wonder why it was invested there.

Auckland-based investment firm Clegg & Co Finance has been placed in receivership this week. NZ $15 million of investors money is at risk.

On August 28 Brian Clegg, the director of Clegg and Co, wrote to investors written under a Classic Finance letterhead:

He writes about the publicity surrounding the collapse of finance companies, but believes his company is one of the "safe" ones, because it was "still operating profitably and successfully in accordance with our lending policy", and had kept out of high-risk lending.

In yet another collapse, investors in Five Star Consumer Finance heard today that they would expect to receive back 26c to 40c in the dollar on money invested but nothing forthcoming until December.


Related Share Investor reading

Money Managers Saga: 3 Story wrap
Money Managers gives First Step investors the middle finger
Greed is bad: Geneva Finance Folds
Financial 101: Learn before you leap

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Recommended Fishpond Reading

Crisis: One Central Bank Governor and the Global Financial Collapse

Buy The Intelligent Investor & more @ Fishpond.co.nz

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c Share Investor 2007 & 2008


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