LOCAL investors with the failed Banksia finance company were likely to receive “a meaningful return on their investment”, the receivers for the company said yesterday.
The receivers’ statement came as the state and federal governments scrambled to respond to the collapse as comparisons with the failure of the Pyramid Building Society in 1990 were being made.
The Banksia receivers, the McGrathNicol group, said it did not expect investors would recover all of their funds.
The Standard has been deluged with calls from angry and distraught investors, including an elderly couple with $30,000 at risk as the husband undergoes chemotherapy treatment for cancer.
Another, a 79-year-old widow, she she lived off the interest from her “enormous” Banksia investment. Premier Ted Ballieu told ABC Radio yesterday he understood Banksia had up to 20,000 debenture accounts in Victoria but the number of debenture holders was thought to be much fewer.
Mr Baillieu said he had spoken yesterday with Prime Minister Julia Gillard about the collapse and the Rural Finance Corporation would provide advice to those affected.
He said the state would work with the federal government to determine if emergency hardship assistance could be provided to people left without money because of Banksia’s downfall.
McGrathNicol said it anticipated it would be be able to provide more clarity around the return to investors at a meeting with debenture holders in five weeks’ time.
"At that meeting, the receivers will provide debenture holders an update on the financial position of Banksia and on the realisation strategy for the business and the assets of Banksia."
The receivers said Banksia had substantial liquid assets which had prompted them to "immediately explore how best they can start making payments to debenture holders".
"It is our objective to start to make an initial return of capital to debenture holders within eight weeks.
"The receivers’ immediate focus is to determine an appropriate sale/realisation strategy for the assets of Banksia.
"In that regard, we will immediately undertake a detailed review of Banksia’s business and loan portfolio.
"We will undertake this process in conjunction with the executive team at Banksia under the leadership of acting chief executive officer, Warren Shaw."
The receivers said Banksia owed about $660 million to investors. Funds from investors had been lent to borrowers primarily to finance real property purchases, McGrathNicol said.
Speaking on ABC Radio, Premier Baillieu said he could understand that comparisons were being made between the collapse of Pyramid and Banksia but he "was not in any position to make any judgement about that".
"It is a huge worry to a lot of people."
Member for South West Coast Denis Napthine said Banksia’s collapse was "a huge shock" and would have a devastating effect on many community organisations, families and individuals.
"We have seen how the collapse of the Pyramid Building Society had a devastating effect on Warrnambool and country Victoria.
"The question needs to be asked of the Federal government supervisory body for non-bank financial institutions about what it knew and when they knew it (about Banksia’s financial situation)."