Fourth New Zealand finance company in receivership as insecurity continues
WELLINGTON, New Zealand: New Zealand finance company LDC Finance Ltd., hurt by funds withdrawals and unable to service its lending, has been placed in receivership, company trustee Perpetual Trust Ltd. said Tuesday.
It was the fourth nonbank finance company in two weeks put into receivership after defaulting on debt payments as insecurity on global credit markets continues to hit New Zealand's finance sector.
Eight local nonbank lenders have collapsed in the past 16 months.
Investors with the eight companies are owed some 1.14 billion New Zealand dollars (US$798 million; €587 million), observers said.
New Zealand stock exchange operator New Zealand Exchange Ltd. last week sought to restore confidence in the listed finance company sector, saying all 15 finance companies listed on the bourse comply with continuous disclosure regulations.
Under those regulations companies immediately must notify the exchange of any deterioration in trading conditions or change in circumstances that may impact on profits.
Tuesday's move was triggered by the string of recent high-profile finance company collapses sparking an "unsustainable" level of demand for repayment of on-call deposits, Perpetual Trust said in a statement.
Chief executive Louise Edwards said LDC had experienced a run on its funds over the past two days as investors rang demanding their money back.
She described the run as "unprecedented," adding that "liquidity is a real problem particularly if people have on call deposits."
Edwards said LDC fundamentally was a good company with good commercial property assets but was unable to sustain such a run.
New Zealand's central bank said last month that it would step in to boost liquidity in local money markets by accepting bank bills as collateral in a bid to ease short term banking sector liquidity pressures.
Original article posted here.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment