By 
A couple of good articles with some perspective on todays events.
http://www.stuff.co.nz/business/personal-finance/4080310/SCF-not-quite-a-Lehmans-moment
http://www.nzx.com/news/economy/4080256/Keep-SCF-in-perspective-NZIER
The fact is that SCF had lost its “investment grade" rating from Standard & Poors some time ago. While the S&P ratings are not a 100% tool for accuracy, it is a barometer in which there has been extensive research and a tool we use extensively when looking at fixed interest securities.
Again, a mantra of diversification and quality research must be applied when managing investment assets. Even when dealing with “too big to fail” companies. The fact that Mr Hubbard seems like a real nice guy has nothing to do with it.
The Government Guarantee has saved investors (and some Advisors no doubt) this time, but when you ensure your new car do you go out and drive like a mad man/woman. Why would you do the same investing? The insurance comes at a cost to future policy holders (read the tax payer) and one day, may not just pay up!
The real pity here (in my view), is an Icon with a genuine community mantra has fallen. It did not happen overnight though. The indicators were there.
07:47, 01.09.2010
From a lending perspective the receivership of SCF and 10 days ago of Allied Nationwide Finance creates a large hole in the second tier finance market. These company’s, and many others that have previously collapsed, were the lenders to SME”s who could not get bank loans or loans from the blue chip finance company’s, UDC and Marac. Where these borrowers now go is the unanswered question and this in turn will effect these businesses growth plans.
09:07, 01.09.2010
Excellent point Nigel and a real issue in a place like Hawkes Bay. There are no winners here and the SCF brand (Lion) is used and it products are sold via local distribution (including Hawkes Bay) brands. This does touch many people.
The SCF brand also sits on the back of the Ranfurly Shield holders and ITM Cup table topping Southland. This damages the heartlands, maybe not so much in the micro economics and true numbers (see articles), but in confidence of everyday SME’s (borrower) and mum and dad (investors).
I do wonder how many investors into SCF knew they were effectively financing “second tier” borrowing and did their interest rate or return reflect that risk?
12:53, 01.09.2010
Well I guess a harmless plug for my business won’t help, I still have access to a number of lenders for the SME market so not all is loss.