$660 million crash to hit investors

Written By Unknown on Kamis, 25 Oktober 2012 | 22.54

Banksia Financial Group has been placed into receivership. Source: Herald Sun

THOUSANDS of investors are facing hundreds of millions of dollars in losses after the shock collapse of Banksia Financial Group.

Banksia appointed receivers yesterday owing investors $660 million.

About 3000 investors in eight towns and cities in regional Victoria have had their investments frozen while receivers McGrathNicol work their way through the non-bank lender's accounts.

About 100 workers also are set to lose their jobs.

The collapse has shocked communities across the state.

Kyabram resident Jason Dunn said the town was reeling.

"People are in tears," he said.

He said many locals feared they would lose their retirement fund.

"People who worked hard all their life have just lost the lot. It's really going to affect the town. It's a black day here," he said.

Kyabram local Lynne, 50, opened up an account two weeks ago with about $8000 for a holiday.

"I'm devastated, but I got off lightly," said Lynne, who asked that her surname not be used.

"One retired lady lost the lot - $400,000. Now it has probably just gone, disappeared like that," she said.

She said Banksia was an institution that locals had trusted.

The pastor of Kyabram Baptist Church, Robert Arnold, said it was likely the church would lose money.

He said there had been no warning signs that the firm was in trouble.

"Our banking goes through them," Mr Arnold, 70, said. "It has come as a shock. I would have thought it would have been pretty well managed."

Banksia, which was founded in Kyabram, offered investment products including fixed-term, superannuation and pensioner deeming accounts and mortgage schemes.

Banksia has a network of 14 branches across Victoria, NSW and SA with headquarters in Melbourne.

Its other Victorian branches are in Echuca, Ballarat, Bendigo, Geelong, Shepparton, Tatura and Warrnambool.

McGrathNicol receiver Tony McGrath said it was too early to know what caused the collapse.

He said an urgent review of Banksia's financial position, loan book and properties was under way.

Banksia fell into receivership after a recent review of its non-performing loans.

"Our primary concern is to ensure the interests of debenture holders are being protected," Mr McGrath said.

Staff will work on during the review.

The group, which bills itself as a "non-bank alternative", was founded as Kyabram Housing Investments by Patrick Godfrey in 1968. In 1999, it merged with other small investment companies to form The Banksia Financial Group.

Mr Godfrey stepped down as chief executive in August and was replaced by Warren Shaw, a former National

Australia Bank general manager in charge of overseeing its retail branches.

Mr Godfrey continues to serve as a board member.

john.dagge@news.com.au


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