SCF fate 'of its own doing'

Blame for the demise of South Canterbury Finance lies fairly and squarely with itself, according to South Canterbury's chief executive Sandy Maier, but he kept clear of apportioning individual blame.

In a post-receivership press conference, Mr Maier praised the Government for having lived up to its deposit guarantee scheme, but said South Canterbury's receivership was a "fate of its own doing".

"South Canterbury's failure was through its own activities and choices, which ultimately caused South Canterbury's problem," Mr Maier said.

South Canterbury was largely caught out by increasing its lending to property developers during boom time.

Many of those debts were never repaid, and it ended up booking losses of about $200 million.

Subsequently, roll-over rates of investors came under pressure and repeated credit downgrades by international ratings agencies, mainly Standard & Poor's, saw an ebb in investor confidence.

When asked, Mr Maier described Mr Hubbard (82) as a "larger than life" person with whom he had worked closely since his own appointment nine months ago.

During that time, the entire South Canterbury board was changed, plus many senior managers, and while Mr Hubbard was made president for life, he was essentially removed from day-to-day operations.

"He was under enormous pressure and had borne up well," Mr Maier said.

However, he said Mr Hubbard and himself "had to disagree on a lot of things", such as the provisioning of debt allocations and writing down of assets, as Mr Maier publicly sought to remove as much toxic debt from South Canterbury's financial reports as soon as possible.

While the actual connection between other entities of Mr Hubbard's, which had separately been placed into statutory management by the Government, and South Canterbury operations was "minimal", Mr Maier said "where there's smoke, there's fire".

"There has been an impact in a confidence sense ... that hurt us over the months."

He highlighted that no interest payments had been missed and much the maturities faced by South Canterbury at the end of October, estimated at just under $1 billion in March, had since been repaid and the figure was down to less than $300 million.

In an earlier statement, Mr Maier said he was aware of the "enormous challenge" which lay ahead when he accepted the appointment as chief executive.

"It was always going to be a big task. I knew that, and the directors did, too.

"But we thought that at the heart of the company there was an established business with a proud heritage that was worth saving, and we have combined our skills with those of the company's dedicated staff in an endeavour to achieve that goal," he said.

He said the 10 core management staff and 100 other employees would work, as required, with receivers "in the months ahead".