Banksia investors get first repayment

Banksia Securities investors have received their first repayment.

Receiver McGrathNicol took over the financing group, and Cherry Fund Limited's, after its collapse in October.

Investors have received 20 cents in the dollar on debenture holders’ investments, with McGrathNicol estimating a total repayment to Banksia debenture holders of between 50 and 65 cents in the dollar.

“We hope the first distribution provides some initial relief to investors following the failure of BSL,” said Tony McGrath.

“The loan recovery processes we have put in place aims to ensure further distributions are paid as quickly as possible."

Mr McGrath also stated events he believes lead to the demise of the financing group.

“The receivers attribute the failure of the companies to several factors including a general reduction in property values, difficult credit market conditions, inadequate provisioning in the loan books and a mismatch between the timing of debentures due for repayment and the recoverability of borrowers’ loans,” he said.

A report released to investors today by McGrathNicol on reasons for Banksia's failure include the fact that it advanced 956 loans to individual borrowers totally $527 million.

Mr McGrath said they expected to make a second repayment it investors on June 30, 2013.