Bendigo’s great southern exposure
(27 May 2009 – Australia) Bendigo and Adelaide Bank has revealed a potential exposure to the now collapsed Great Southern Limited, through loans to thousands of investors.
Bendigo and Adelaide Bank (BEN) indicated a potential exposure to Great Southern Limited (GTP), which has entered into voluntary administration and subsequent receivership.
BEN said that while it has no direct exposure to GTP and has not lent money to the company, the bank has, over the past six years, lent money to approximately 8,200 customers who have invested in Managed Investment Schemes (MIS) through GTP.
The A$615 million exposure, an average of $75,000 per investor, consists entirely of loans that are full-recourse to each individual borrower. BEN noted that the borrowers still had obligations to the bank, despite the collapse of GTP.
The exposure for BEN is therefore dependent on whether the 8,200 investors can pay their loans back to the bank, as well as how much those investors can get back from GTP.
Last month, the bank downgraded full-year profit forecasts to between $205 million and $218 million. Any significant real exposure that comes through to Bendigo could wipe out a significant portion of their profits.
These loans to investors represent about 1.5 percent of BENs total loan book. The bank’s latest half year result showed provisions and reserves for doubtful debts at $156.9 million.
BEN said that while it has no direct exposure to GTP and has not lent money to the company, the bank has, over the past six years, lent money to approximately 8,200 customers who have invested in Managed Investment Schemes (MIS) through GTP.
The A$615 million exposure, an average of $75,000 per investor, consists entirely of loans that are full-recourse to each individual borrower. BEN noted that the borrowers still had obligations to the bank, despite the collapse of GTP.
The exposure for BEN is therefore dependent on whether the 8,200 investors can pay their loans back to the bank, as well as how much those investors can get back from GTP.
Last month, the bank downgraded full-year profit forecasts to between $205 million and $218 million. Any significant real exposure that comes through to Bendigo could wipe out a significant portion of their profits.
These loans to investors represent about 1.5 percent of BENs total loan book. The bank’s latest half year result showed provisions and reserves for doubtful debts at $156.9 million.
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