Banksia investors may salvage half their funds

INVESTORS in the failed non-bank lender Banksia Securities Limited are likely to get just over half of their money back, dashing any hopes of a full repayment.

Receivers McGrathNicol announced the first repayments of 20 cents in the dollar to begin yesterday, with an estimated total repayment to BSL debenture holders expected to be between 50 and 65 cents in the dollar.

The news surpassed initial estimations made last month that investors would get back just 10 cents in the dollar in their first payment.

“We hope the first distribution provides some initial relief to investors following the failure of BSL,” receiver Tony McGrath said.

“The loan recovery processes we have put in place aims to ensure further distributions are paid as quickly as possible.”

Overall repayments are expected to take months, with a second payment to be made before June next year. News of the repayment has brought bittersweet relief for south-west investors who have spent months waiting in limbo. 

Warrnambool’s Josephine Meddings had $216,000 invested in Banksia from the sale of her home after the death of her husband. 

Ms Meddings, 71, had been living off the interest generated by the fund — little more than a thousand dollars a month.

She told The Standard of the nervous wait to see her bank account. 

“I’m supposed to be getting some back now, but I’m not sure how much,” Ms Meddings said. 

“If there’s $2000 in the bank account, that’s good.”

Ms Meddings, who lives with her partner, has been told she is not eligible for any Centrelink assistance. 

“I haven’t got any income,” she said. “There’s nothing I can do except wait. I just hope there’s some good news in the new year.” 

Receivers have analysed Banksia books to release a financial post-mortem of BSL and Cherry Fund Limited (CFL) — a member of Banksia. 

More than $663 million is still owed to thousands of debenture holders and investors, most of them in Victoria. 

About $10 million is owed to CFL investors with 55 to 70 cents in the dollar expected to be repaid. 

“The receivers attribute the failure of the companies to several factors, including the a general reduction in property values, difficult credit market conditions, inadequate provisioning in the loan books and a mismatch between the timing of debentures due for repayment and recoverability of loan books,” Mr McGrath said. 

While both BSL and CFL reported profits in recent years, receivers said “non-performing loans” had incurred losses on the companies. 

More information sessions have been scheduled for Kyabram, Ballarat and Shepparton on December 14, with those wanting to attend urged to call Line Market Services on 1800 722 079. 

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