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SCF: a proud farming history

Published: 9:09PM Tuesday August 31, 2010 Source: ONE News

South Canterbury Finance is one of the oldest and biggest finance companies in New Zealand, established in 1926.

Back then it was known as South Canterbury Loan and Finance, and had 15,000 pounds in its account. The first loan the company made was for a grand total of 30 pounds.

The company was established in Timaru, a town built on rural wealth, and specialised in small personal loans - a tradition that continued when Timaru accountant Allan Hubbard became a director in 1965.

KPMG ranked it as New Zealand's 10th largest finance company in 1992; it climbed to seventh in 1997 and third by 2007.

"From 2004 to 2008 its assets doubled from $1 billion to $2 billion," economist Brian Gaynor said.

Just two years ago, the company announced a record profit.

"We sleep very well at night because we have those cash reserves," former South Canterbury Finance CEO Lachie McLeod said in August 2008.

But as the company grew, problems began. The company diversified into the property market and got burnt.

"I think South Canterbury, like most finance companies, was seduced by these property developers," Gaynor said.

Lately the company has relied on its government guarantee to attract new investment and with Hubbard leaving the board, the new boss, Sandy Maier , worked hard to reassure investors.

But another blow came when Hubbard's company was placed in statutory management and Hubbard, who owns 75 percent of SCF, became part of a fraud investigation.

"I have done nothing wrong and I have a clear conscience," Hubbard said three days later.

South Canterbury Finance was quick to distance itself from its majority shareholder.

"We're not directly involved," Maier said the same day.

With Hubbard under investigation, the fallout had an immediate impact on the Standard and Poors credit rating, which fell first to B- then slumped to CC, indicating a highly vulnerable company.

But today's fall - into receivership - was the worst possible news for the company.