Heartland New Zealand to acquire PGG Wrightson Finance
http://www.nzx.com/markets/NZSX/HNZ/...ghtson-Finance
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Heartland New Zealand to acquire PGG Wrightson Finance
http://www.nzx.com/markets/NZSX/HNZ/...ghtson-Finance
Well it wasn't exactly a surprise :) Seems a fairly conventional arrangement I guess. Good to see an assurance there will be no EPS dilution resulting frm the placement. I wonder how much in excess of 10% the ROE will eventually be? I'm not that confident it will be much, but would like to hear others opinions on that.
I am waiting for the announcement of SPP, so i just need to spend $30+ for the engagement of SPP:)
The article by Tim Hunter in today's Sunday Star Times on Heartland is well balanced and fair.
"And while there are undoubted risks that Heartland will not achieve its goals,its management have so far demonstrated a clear strategy and excellent execution.
On those grounds it may earn a place in the portfolio."
Yes Percy a well balanced article but I hope Hunter wasn't swayed by what Cairns from Forbar told him .... that guy is more passionate about PGC/HNZ than you are
As long as HNZ remember that at the core of their business is 2 old fashioned Building Societies they should do OK - building societies that traditionally solid instutions which for generations have taken members savings in and prudently lent that money out on rock solid investments without taking on much leverage and associated risk.
Go too far away from this principles and think they can make zillions from a different approach then maybe the aspirations wont be achieved
Bit of a worry when that head finance man says 'Heartland aims to encourage depositors by becoming a bank, reasoning that people are more relaxed about putting money in a bank than with a finance company' So is becoming a bank just one big (and expensive) marketing ploy
This is what happens when Building Societies become financial instutions with a treasury department and change their business model .... and probably why the world is in such a mess today
A great article by John Kay in the Financial Times - We let down diligent folk at the Halifax
http://www.johnkay.com/2008/09/24/we...at-the-halifax
Even if you don't read the whole article (it is a short one) read this bit
The business I joined gathered deposits from small savers, mostly through its branches. It lent the proceeds to house buyers. Founded as a self-help organisation by provident Yorkshire folk 150 years ago, the Halifax became the world’s largest mortgage lender. Its quality of service and competitive interest rates trounced conventional banks in the UK retail savings market. The simple business model was very robust. In the early 1990s, a combination of high interest rates, recession and falling house prices posed much more serious problems for UK homeowners than anything seen, or likely, in the current credit crunch. But the Halifax remained profitable and mortgages readily available
Accepting deposits and underwriting and administering mortgages requires that millions of records should be maintained and updated every day with almost no errors. This activity does not require flair or imagination but does require conscientious individuals with integrity and loyalty. The Halifax was a precision machine that made the most of the talents of ordinary people. I came to understand the fundamental incompatibility of the cultures of retail and investment banking and why the marriage of the two so often leads to tears.
Accepting deposits and underwriting and administering mortgages requires that millions of records should be maintained and updated every day with almost no errors. This activity does not require flair or imagination but does require conscientious individuals with integrity and loyalty. The Halifax was a precision machine that made the most of the talents of ordinary people. I came to understand the fundamental incompatibility of the cultures of retail and investment banking and why the marriage of the two so often leads to tears.
(Really a story about business sustainability but thats another topic)