Premier Ted Baillieu has met with Banksia administrators McGrathNicol to talk about their plans for the future of the investment company.
At a press conference in Bendigo this afternoon, Mr Baillieu said Banksia’s collapse was a “significant financial event” which would affect thousands of regional Victorians.
More than $660 million in savings has been put at risk. But Mr Baillieu said he understood that there would be a return to investors.
He said Banksia came under Commonwealth regulation and that it was not a bank and not covered by any deposit guarantees.
“The State and Commonwealth will work together in regards to any emergency assistance that may be necessary,” he said.
"The first port of call there will be to Centrelink on 132 850 or through local government."
Bendigo's Banksia office on Williamson Street did not open this morning following the collapse of the financing group overnight.
A notice in the window confirmed to clients that the company was in the hands of receivers.
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"Pending the appointment of receivers the company has taken immediate steps to suspend withdrawals and new applications for investment products to ensure an orderly transition of the company to the control of the receivers and the equitable treatment of all investors," reads part of the notice.
One woman who went to the office told the Bendigo Advertiser her husband had invested money in the company.
"We're not happy," she said. "That's our retirement."
A retired Echuca dairy farmer, who did not wish to be named, said he a joint investment with his wife worth $60,000 and his son had invested $50,000.
The 76-year-old said he did not expect to see a dollar of it back.
"We'd hope to get the lot, but it's ridiculous to think that," he said.
As a non-bank lender, Banksia offers investors high interest on debentures and then lends these funds out as mortgages or commercial property loans.
Given Banksia does not hold a banking licence, the funds in the debentures are not backed by a deposit guarantee.
Debenture firms often target retirees as investors, generating new business through promises of high-interest returns backed by property.
Receivers McGrathNicol took charge of Banksia last nightand froze the $660 million in investments and stopped all interest payments as it began an urgent review of the company's accounts.
''We are at present calculating the value of your investment to the date of our appointment and will provide those details as soon as possible,'' McGrathNicol told investors last night.
''At this early stage, timing and the amount of any dividend is uncertain and is dependent on the realisation strategy adopted by the receivers and managers,'' it said.
The attempt to claw back funds could cause a credit crunch among some property developers that relied on Banksia for loans.
Big banks have already warned they are taking a tougher view towards commercial property lending, particularly as the economy slows.
Banking major ANZ yesterday warned it had already seen a rise in bad debts in rural and regional areas, and more pain could be felt if commodity prices rebounded from recent falls and pushed the Australian dollar up.
McGrathNicol's appointment was triggered by Banksia launching a review of its lending book.
Early figures from the review presented to the board yesterday indicated a sharp jump in provisions needed to cover bad loans.
The steep losses were likely to lead to Banksia having ''negative net equity'', it told debenture holders ahead of the appointment of McGrathNicol.
At the end of June, loans valued at $65 million made by Banksia were overdue, according to the company's financial accounts. In addition, it had seized property against which it had lent $74.5 million.