None at all.
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2/ Liquidity buffer ratio (including bank lines) >10%
The hurdle setters don't specify, but I believe that this test is to provide an insight into how current liabilities are matched to current assets. It could be thought of as a 'stress test' on liquidity with a twelve-month time horizon.
From p12 (Interim Statements of Financial Position) we see HNZ has total borrowings of $1,985,551,000, made up principally of term deposits lodged with Heartland. Note 11 is meant to give a breakdown of these borrowings. Strangely there is no breakdown given of current and longer-term borrowings. Nevertheless Note 11 contains this tantalizing hint.
"On 2 August 2011, the Group entered an agreement with its securitisation facility provider to increase the MARAC ABCP Trust 1 securitisation facility by $100m to $300m, and to extend its maturity date to 8 August 2012."
This gives the impression of Heartland almost operating 'hand to mouth' with even this new banking syndicate agreement expiring within just a
year of being signed. To proceed further I can only assume that all funds deposited with Heartland, directly or indirectly (via securitisation) are 'current liabilities'.
This money has been on loaned to customers who want loans. These customers owe HNZ 'Finance Receivables' of $2,075,211,000. Again there is no breakdown as to what loans are current and longer term. Given:
1/ I understand 'liquidity' to be a balance between the maturity profile of current debenture holders VERSES
2/the loan periods associated with those on lent funds are unknown,
then my analysis comes to a full stop. Any ideas as to how to proceed from here, or even opinions on if I am on the right track, would be greatly appreciated.
Result: UNCERTAIN (due to lack of published loan data). But if almost all depositors have put their money with Heartland on a one year or less basis, then I am not encouraged.
SNOOPY
This is the same George Kerr that is so sure of the prospects of Heartland that he has recently sold all of his own shares in HNZ is it?
From
http://www.stuff.co.nz/business/opin...ter-than-white
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"Was PGC buying Kerr's shares, thus helping finance its own takeover?
No, said Mogridge. "There has been no buying from Mr Kerr," he told NBR through a spokesman last week.
Really?
NZX disclosures show Kerr's company Pyne Holdings had 7.7 per cent of Heartland last August, a holding it had sold down to 4.99 per cent by January 31. Thereafter no more public disclosures had to be made because the stake was below the 5 per cent threshold.
To find out what happened next, Chalkie checked the share register. On February 8, it showed PGC had yet to buy any more shares, and Pyne Holdings still had 19.3 million shares, or 4.98 per cent.
Pyne sold a few small chunks in the following days, but on February 27 it disposed of 19.1 million shares through broker First NZ Capital Securities. These were then transferred to a holding account at NZ Central Securities Depository.
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Still those warning bells aren't ringing Percy?
SNOOPY
Your industry is commendable, Snoopy.
Somehow I think you're off beam here.
SBS Bank at 31 Dec 2011 had an equity ratio, according to your definition, of 213M/2,845M or 7.5%.
Percy should be pleased that HNZ eclipses at least one banking licence holder in this metric.
Well I could be wrong Under Surveillence. I am in the sights waiting to be shot down. But I don't think anyone has hit me with a straight between the eyes shot yet. It could be there is some different definition of 'equity ratio' that Heartland is using that is not in accordance with the 'investorwords' definition. But unless someone can point out what that is I will stick with what 'investorwords' says.
Your example above is interesting but doesn't disprove anything as it stands.
Apparently the Reserve bank requirement is for an equity ratio of 9.58%. But where has this figure come from? And why is it so precise to two decimal places? Perhaps in pre GFC days the figure was less? Maybe SBS bank qualifed as such when the hurdle was set at a lower level? I am interested if anyone can shed any light on these questions!
SNOOPY
Hopefully we may have some correct answers to so many questions shortly, as I rang the company and advised them of our discussion here on sharetrader.
Yes, but I need to remind readers of this forum of one crucial point. We are trying to determine what a suitable equity ratio for HNZ is. All the figures being bandied about (bar my suggested 20% minimum) are assuming Heartland is a bank. But Heartland is not a bank. Closing your eyes and wishing yourself to be a bank does not cut it with me.
SNOOPY
Just in case anyone gets the wrong idea about my comment. I am not suggesting that HNZ is doing anything improper by not publishing a maturity profile of their debentures. I am sure that the accounts are correct as published and meet all accounting standards.
What I am suggesting is that the NZ finance sector has gone through such a rough time that publishing the bare bones legal requirements on what the accounting standards set out may not be enough engender investor confidence. And this is an issue that all finance sector companies must face.
SNOOPY