AFTER a century in business Warrnambool-based Southern Financial Group will shut its doors, leaving 30 staff out of work.
News of the closure comes after the announcement of the sale of the company’s assets to the Bendigo and Adelaide Bank.
“It’s sad to see what’s been a good business for the community come to an end,” CEO Ashley King said yesterday.
“There’s certainly mixed emotions about the completion of the sale.”
Mr King confirmed that offices in Warrnambool, Hamilton and Geelong would close their doors.
“At the moment Southern’s Warrnambool, Hamilton and Geelong offices remain open to assist customers and Bendigo and Adelaide Bank during the transition period ... which is expected to take approximately six months,” he said.
Branches in Mount Gambier and Ballarat closed their doors last week.
Noteholders had been blocked access to their funds by a federal court order, which was only lifted on Monday.
Southern’s trustee, The Trust Company, sought the order in November fearing a run on investment withdrawals following the collapse of fellow non-bank lender Banksia Securities in October.
Last week Southern announced a sale agreement with Bendigo and Adelaide Bank for acquisition of its loan book and other assets, with the purchase price to repay Southern Finance noteholders — good news for Southern investors who had been waiting anxiously.
“We’re pleased to see that noteholders will receive full entitlements of principal and interest,” Mr King said.
Both Southern and Bendigo remained tight-lipped about the sale price of assets.
“The sale price enabled all Southern Finance noteholders to be paid,” Mr King said.
Senior managers of Southern Financial Group will not be offered a place on the Bendigo and Adelaide Bank board.
Of the company’s 37-strong workforce, about seven financial planning staff will be offered positions with the Bendigo and Adelaide Bank.
Mr King confirmed that Southern’s leasing and financial planning arm had also been acquired by the regional banking giant.
Deakin University professor of accounting Graeme Wines said the news signalled the loss of confidence in non-bank structures such as Southern and Banksia.
“With the fall of Banksia and various other mortgage companies, those structures really have become unviable because people have lost confidence in them,” Professor Wines said.
“If they (Southern) had opened their doors again people would have just rushed in to take their money. It’s obvious that there was a lack of regulation for those type of mortgage companies.”
However, he said it was good news for Southern noteholders, in contrast to Banskia investors who may only get 60 cents in the dollar back.
He said the Australian Investment and Securities Commission was likely to now closely examine such companies, but added it was “too late”.
A spokeswoman for Bendigo and Adelaide Bank would not comment on the closure of the company — only on the sale of its assets.
“Anything outside of that we won’t be able to provide comment on,” the spokeswoman said.