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ANZ considers IPO for UDC Finance

ANZ says it will explore the possibility of an initial public offering (IPO) of
ordinary shares in UDC Finance as part of a range of strategic options for UDC’s future.

A wholly-owned subsidiary of ANZ Bank New Zealand, UDC provides asset finance for a range of industries, including transport, agriculture and manufacturing. 

ANZ New Zealand CEO David Hisco said: “We have been looking at strategic options for UDC’s future for some time as part of ANZ’s strategy to simplify the bank and improve capital efficiency.

“While UDC is continuing to perform well and there is no immediate requirement to make decisions, after last year’s planned sale to HNA did not proceed it makes sense to keep examining a broad range of options for UDC’s future.

“This will include exploring whether, subject to market conditions, an IPO would be in the interests of UDC’s staff and customers, and ANZ shareholders.

“The range of strategic options we have for UDC, including approaches we have received regarding the business and the option of retaining it, will take a number of months to examine before any decision is made. In the meantime, it will continue to be business as usual for UDC,” Mr Hisco said.

The HNA sale was first announced by ANZ in January 2017, but fell through a year later after the Overseas Investment Office (OIO) declined the application. 
 

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Mercedes-Benz – the world’s most valuable brand

Mercedes Benz is now worth $43.9 billion, 24 per cent more than in the previous year, according to the 2018 Brand Finance Report.  

Second place went to Toyota, who dropped 6 per cent compared to the previous year, to $43.7 billion, while the third spot went to BMW, whose brand value is estimated at $41.8 billion. Volkswagen, who suffered a severe drop in brand value following the ‘Dieselgate’ scandal, is on the rebound, occupying fourth place ($25,014 billion).

The biggest increase in value belongs to Aston Martin, who managed to increase by 268 per cent compared to 2017. The brand reached $3.6 billion and is now the fastest-growing brand in the automotive sector. Overall, Aston Martin ranked 24th in the report.

The fast-growing Chinese car market managed some serious leaps in terms of brand value, with six Asian brands managing to make their way into the top 50; Haval, Geely, BYD, Baojun, Foton and JAC Motors.

According to the report, brand value is established after compiling data from several key indicators. These indicators include marketing investment, stakeholder equity, business performance and royalty rate. Brand revenue is also taken into consideration.

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NZ to receive JLR’s financial services

New Zealand will become Jaguar Land Rover’s first import market for their branded financial services product.

Steve Kenchington, general manager of Jaguar Land Rover NZ, said that spikes in demand for their vehicles have paved the way for a new financial package, provided in partnership with Heartland Bank.

Chris Flood, Heartland Bank’s Deputy CEO, says Heartland were delighted to be selected as financial services supplier to Jaguar Land Rover.

“We are proud to partner with Jaguar Land Rover, a strong and iconic brand in the New Zealand marketplace.”

“A key part of Heartland’s strategy is to grow its business through partnering with intermediaries, enabling us to reach more customers at the point of sale. We look forward to working with Jaguar Land Rover and believe our partnership will bring significant value for our mutual customers.”

“Jaguar Land Rover’s local sales have grown substantially over the past five years as new models have been introduced to the range and economic factors such as a strong housing market and an increase in immigration have provided a further boost.

“The introduction of a financial product under our own label was the next evolutionary step as the brand has further matured in the New Zealand market, and complements our existing 5 Year Service Plan sold with every new Jaguar Land Rover model in New Zealand, ” he said.

Customers purchasing a Jaguar Land Rover model under the new product will be given a guaranteed minimum buyback price.

“This means our customers will have further confidence that the vehicle they buy from us today will retain its value until they are ready to trade in, upgrade, refinance, keep or return it, when it reaches that point in its lifecycle.”

Jaguar Financial Services and Land Rover Financial Services will be available in Authorised Retailers from 15th January 2018.

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Record result for UDC Finance

UDC CEO Wayne Percival

UDC Finance has posted a record net profit after tax of $61.6 million for the year to 30 September 2017, a 5 per cent increase on the previous financial year.

Total lending increased 13 per cent to $2.91 billion. Motor vehicle lending increased by 28 per cent, up $261 million, commercial lending and equipment dealer lending both increased by 4 and 7 per cent, respectively.

“UDC has delivered another very good result, reflecting growth in our loan portfolio across a range of industries, continued improvement in credit quality and careful management of costs,” said UDC CEO Wayne Percival.

“Continued strength of the economy has seen record new car sales, healthy investment in new equipment in agriculture, forestry, construction and business services. Our focus remains on our core business of financing these requirements and understanding the needs of our customers.

“This momentum has continued, with UDC’s loan book passing $3 billion at the start of November.”

Revenue increased by $3.6 million, a growth of 3 per cent compared to the full 2016 year. Underlying revenue growth from lending has been even stronger, but this was offset by the cost of funds, lower prepayment revenue and lower fee income.

Costs remained under control, increasing only 3% during the year. Increased efficiencies have resulted in cost-to-income reducing to 26.1%.

Provisioned expenses of $5.9 million is a decrease of $1.5 million (-20%) on FY16. The overall quality of the lending book remains strong and there have been no individually significant write-offs in the period.

At $1.039 billion, debenture funding remains an important part of the funding mix but has declined by 35% from the prior year.

ANZ has increased the level of funding support with the limit on the facility increased to $2.7 billion effective from 13 November 2017.

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ComCom to crack down on lending

Responsible lending is one key priority for the Commerce Commission for the upcoming year, according to a new report.

Chairman Mark Berry said that while there were a number of areas the Commission would always regard as a priority, the organisation would also focus on several “priority focus areas” in 2017 and 2018, which have been published for the first time.

“We will focus on responsible lending (including online lending) and credence claims,” Berry said.

“Despite the number of investigations and cases we have taken, our intelligence suggests some lenders are still failing to comply with responsible lending principles.”

The Commission’s announcement that it would take a hard line on responsible lending follows an update to the official Consumer Credit Fee Guidelines on June 30.

Numerous finance companies have been charged by the Commerce Commission for failing to comply with the Credit Contracts and Consumer Finance Act (CCCFA) by enforcing unfair fees.

Most recently, Acute Finance Limited was fined $22,000 by the Commerce Commission for unreasonable mandatory fees on their loans.  

“By failing to comply, these lenders are not only breaching the law, they are potentially putting people at risk of hardship,” Berry said.

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Acute Finance in breach

Acute Finance Limited, a Christchurch-based lender, has been fined $22,000 and says it has taken steps to return $10,000 to borrowers after pleading guilty to four charges under the Credit Contracts and Consumer Finance (CCCF) Act, the Commerce Commission reports.

These charges are in relation to the fee that borrowers paid for Acute’s repayment waiver, where Acute agreed to meet a borrower’s obligations under the loan if they died, became disabled or were made redundant. The repayment waiver was mandatory under the terms of the loan.

Because the fee was mandatory, the CCCF Act states the fee must not be unreasonable. The repayment waiver fee charged by Acute varied, depending on the size of the loan.

The ruling made reference to the Sportzone/MTF ligitation case, where the Supreme Court held that creditors cannot profit from fees. Acute’s repayment waiver fee exceeded the costs of providing the waiver, meaning it was in breach of these legal requirements.

Judge Gilbert of the Christchurch District Court said during sentencing that the offending was careless, and Acute was “charging about three times more than it was entitled to and therefore generating profits not permitted by the Act.”

The Commerce Commission general manger of competition, Antonia Horrocks said “the Commission welcomes today’s judgment which confirms that these fees were unreasonable. Acute’s RWF meant that borrowers paid three times more than they should have for the protection offered by the repayment waiver.”

“All Acute borrowers prior to May 2016 were likely to have been required to pay the fee, and we note that consumers were unaware of the conduct. The case arose from the Commission’s proactive compliance work with the credit sector.”

Acute specialises in small personal loans between $300 and $5,000 for terms of up to three years. Acute said that it has taken steps to credit the accounts of existing customers and refund former borrowers.

This case follows the Supreme Court ruling in favour of the Commerce Commission in the Sportzone/MTF case in 2015, which assessed whether credit fees charged by lenders are reasonable as required by the CCCF Act.

The Supreme Court held that credit fees can only cover costs that are “closely related”to the loan transaction and the CCCF Act “indicates a transaction-specific approach to the setting of fees.”

 “It is not permissible to take all operating costs (or virtually all) and allocate them to one fee or the other.” The Court said at the time.

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Heartland partners with Spotcap

Heartland Bank Ltd has announced a partnership with Spotcap Australia and provided $20.7 million in funding for the online lender to accelerate growth in Australia.

Spotcap Australia provides unsecured lines of credit and business loans of up to $260,000 to small and medium-sized business globally. Funding is allocated based on credit algorithms rather than a company’s financial history, and has issued $93.4 million in credit to various business around the world. Spotcap headquarters are located in Berlin with local offices in Barcelona, Amsterdam, Sydney and London.

Spotcap first launched in Australia in May 2015. Along with the partnership with Heartland, Spotcap has also announced its launch into the New Zealand market today.

“We are delighted to gain further exposure to online SME lending and look forward to working with Spotcap to grow its Australian operations,” Heartland CEO Jeff Greenslade said in a statement.

Shares in Heartland Bank rose 0.6% at the news, trading at $1.57 this afternoon.

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Bapcor appoints new Hellaby board

A boardroom shake-up at Hellaby Holdings was announced on Monday following a takeover by Australian car firm Bapcor Finance. Three directors have resigned effective immediately – Mark Cowsill, Gary Mollard and James Sclater. Steve Smith and Paul Byrnes have agreed to remain as independent directors until the takeover offer concludes, and Alan Clarke will stay on as managing director and CEO while the company transfers ownership to Bapcor.

Outgoing chairman Steve Smith said in a press release that he “would like to recognise and thank the retiring directors for their considerable effort and commitment to Hellaby over a number of years, during which Hellaby improved its trading performance, modified its strategy and portfolio of businesses, and added considerable value for Hellaby shareholders.”

Bapcor has nominated four new directors to the Hellaby Board. Darryl Abotomey, managing director and CEO of Bapcor Limited, has been appointed chairman of the board. Other appointees are Bapcor CFO Gregory Fox, Bapcor general manager for strategic business development, Matthew Cooper, and independent director Margaret Haseltine.

The changes follow Bapcor becoming the majority shareholder in Hellaby Holdings. After receiving acceptances for more than 50% of the shares on issue in Hellaby, Bapcor declared its takeover offer unconditional. Hellaby’s independent directors have advised that shareholders accept the offer after initial rejection, and all Hellaby directors and senior management also now intend to accept the bid. The offer date has been extended until February 7, and Bapcor have now received acceptances for 78.4 per cent of Hellaby’s shares.

According to the National Business Review, Bapcor has said it plans to sell Hellaby’s equipment, resources and footwear businesses and use the remaining automotive division to enter New Zealand market, which has been making year-on-year sales records. Hellaby shares last traded at $3.58, while Bapcor’s stock on the ASX fell slightly on Monday to $(AU)5.47.

 

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ANZ sells UDC

ANZ Bank has sold its asset finance division – UDC for $660 million.

UDC has been purchased by a Chinese conglomerate called HNZ Group, which owns airlines, hotels and other financial services firms.

ANZ New Zealand chief executive David Hisco says the sale followed a strategic review and was in line with ANZ’s strategy to simplify its business and focus on its core banking activities.

“We’re extremely proud of what our teams have achieved over the years providing specialist asset-based finance to New Zealand businesses for plant, vehicles and equipment,” says Hisco.

“HNA is well placed to invest in specialist asset finance products and systems which will help UDC expand further in the future”.

HNA intends to preserve UDC’s operations, offering ongoing employment to all existing UDC employees and maintaining existing customer lending.

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Profit for UDC

UDC Finance has posted a record net profit after tax of $58.5 million for the year to September 30, 2016.

This is a three per cent increase on the previous financial year.

A key contributor to the result was strong lending growth across a diverse range of industries, improved credit quality and a focus on containing costs.

“During 2016 UDC helped customers throughout New Zealand – particularly in the motor vehicles, forestry, transport and construction sectors – take advantage of sustained economic growth and strong business opportunities,” said Wayne Percival, UDC’s CEO.

“The housing and infrastructure build across New Zealand, along with record new car sales, created robust demand for our asset financing expertise, and drove the good result for our business.

“Strong competition among banks for quality lending and deposits put pressure on margins. However, that is now stabilising and with good lending growth we are well positioned heading into the new financial year.”

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Turners with MTF

Integrated automotive financial services group, Turners Limited has signed a partnership deal with with Motor Trade Finance (MTF) to provide a non-recourse lending product to MTF’s network of franchisees and dealers.

(more…)

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