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Marac still has bank aspirations

Marac Finance is undeterred in its goal of becoming New Zealand's only publicly listed bank and asset manager now it has divested itself of risky property impairments and remained profitable.

Tuesday, 1 September 2009

by Paul McBeth

The finance company told brokers in a presentation yesterday it was still positioning itself to become a registered bank and is focused on improving its credit rating. Its Standard and Poor's rating was cut from BBB+ to BB+ last month, mainly due to its property development lending.

While it will continue to pursue its aspiration of becoming a bank, the lender told brokers it is well-positioned for the non-bank deposit taker regime when the central bank announces the new requirements.

The company reported a normalised net profit of $19.1 million in the 12 months ended June 30 from $25.9 million last year. The fall in earnings was put down to the $13.2 million cost of impaired assets, up from $5.7 million a year earlier.

"The mainstay of Marac's funding continues to be its retail debenture programme," which holds some $804 million as at June 30, the company said in a statement. "Retail investors have proven to be extremely loyal and have continued to support Marac with solid levels of new funding and reinvestments."

In July, Marac's parent Pyne Gould said it would take some $160 million of impaired loans on development properties off the finance company's books as part of a restructure, allowing the unit boost its liquidity through buying government and bank securities.

Marac also told brokers to expect more details about a capital raising later this month, as it work towards a fully underwritten issue. First NZ Capital has been mandated as an adviser.

The company will apply to be covered under the extended government deposit guarantee scheme, of which 30% of its debenture book mature after the initial October 12 2010 date, it said.

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