South African Stocks Fall After Finance

South Africa's FTSE/JSE Africa All Share Index extended declines after Finance Minister Trevor Manuel quit along with nine other Cabinet ministers following President Thabo Mbeki's ouster by the ruling African National Congress.

The index dropped as much as 4.4 percent, its steepest decline since Aug. 1, and was trading 4.2 percent lower at 24,810.71 as of 1:09 p.m. in Johannesburg.

MTN Group Ltd., Africa's largest mobile-phone company, declined 9.4 percent to 107.05 rand, while Standard Bank Group Ltd., the continent's biggest lender, retreated 4 percent to 88.59 rand.

Ten ministers, including Public Enterprises Minister Alec Erwin and three deputy ministers, submitted their resignations, the presidency said in an e-mailed statement today. South African Deputy President Phumzile Mlambo-Ngcuka resigned earlier today.

The leadership of the ANC ordered Mbeki to quit eight days after a High Court judge suggested he pressured prosecutors to pursue corruption charges against Zuma, whom Mbeki fired in 2005.

Global reaction to financial turmoil

News of the collapse of Lehman Brothers last week sent shockwaves through the banking community and shivers across the wider City of London. Hopes had persisted till the last minute that a rescue takeover could be conjured up.

But the reality of the bankruptcy stunned everyone in financial services. In such circumstances jobs go quickly and a lot of skilled workers enter the labour market at the same time.

The administrators at Lehman are hopeful of selling some parts of the business and so salvaging some jobs. But with Merrill Lynch being taken over by Bank of America, and HBOS by Lloyds TSB, thousands more are likely to be looking for work.

London's restaurants, car dealers and estate agents will be the first casualties of the ripples from the banking crisis. The already depressed housing market will take a further knock.

The wider British economy will be hit by the City downturn. Around 15% of British economic output is accounted for by financial services and related professions like law. The chancellor of the exchequer may want to go to war on excessive City bonuses. But there is unlikely to be much excess for a year or two and he will lose tax revenue when he can ill afford it.

Online Banking Report Publishes "2009 Planning Guide for Online and Mobile Banking

Online Banking Report has published its 14th annual planning issue entitled 2009 Planning Guide for Online and Mobile Banking: Doing More with Less. The focus this year is helping financial institutions navigate through the strangest business planning cycle in six decades. While much of the road to recovery is outside the control of financial institutions, this report focuses on the many opportunities for smart and nimble players to gain ground.

The 2009 Planning Guide highlights how technology and online techniques magnify the impact of shrinking budgets while supporting marketing efforts to increase brand confidence. The report includes more than 1,000 ideas, tactics and tips for increasing market share, customer engagement, and revenues from consumers and small- and micro-businesses.

Also included is a summary of 20 projects that provide the best bang for your buck next year and beyond and a 12-page section on pricing online services and transactions.

This exclusive research is available only from Online Banking Report and is a must-read for any financial institution. It can be downloaded immediately after purchase at www.onlinebankingreport.com.

SAfrican finance minister available for new govt

South Africa's Finance Minister Trevor Manuel, who resigned Tuesday along with 10 other cabinet members, is available to serve in the new administration, his spokesman told AFP.

"Manuel has always made it clear that he is available to assist in whatever capacity the new administration requires him to," said Thoraya Pandy.

"As an Mbeki appointee he is duty bound to step down out of respect for him." Pandy added.

Manuel has handled the finance portfolio since the birth of the country's democratic government in 1994 and is widely respected for applying the micro-economic policies responsible credited for South Africa's growth.

Before the announcement, the rand was trading at 7.98 to the US dollar. After the revelation that Manuel was going, it slipped to 8.16, according to SA Stock Exchange data.

"Manuel's resignation came as a shock to the markets. It is not just his resignation, but the whole lot of others who went with him," said Kevin Lings, an economist with Stanlib Asset Management.

"The fact that he has made himself available does not guarantee that he will be re-appointed.

Paulson Shorts 4 of 5 Largest U.K. Finance Companies

Paulson & Co., whose main hedge fund made a sixfold return last year betting on a collapse in U.S. subprime mortgages, said it's wagering four of the U.K.'s five largest financial-services stocks will decline.

Paulson has short positions of 0.95 percent in HBOS Plc, the U.K. largest mortgage lender, and 1.76 percent in HBOS acquirer Lloyds TSB Group Plc, the New York-based hedge fund said today in separate statements. Paulson also said it's short 1.18 percent of Barclays Plc, which is buying a portion of bankrupt Lehman Brothers Holdings Inc., and 0.87 percent of Royal Bank of Scotland Group Plc.

The disclosures were required under rules pushed through by the U.K.'s Financial Services Authority last week. John Paulson, founder of the $35 billion hedge fund, in June said banks will need to write down about $1.3 trillion from the subprime crisis after more than $522 billion in losses and writedowns so far.

``Paulson & Co. empathizes with financial firms as to the difficult positions in which many find themselves,'' Paulson & Co. said in a statement distributed by PRNewswire. ``We support the FSA's desire to establish fair trading practices and to eliminate fraud and market manipulation. We will continue to comply with the FSA's requirements.''

The FSA's emergency measures were introduced after politicians and some investors blamed short sellers for a plunge in HBOS's market value last week before it agreed to a takeover by Lloyds TSB. Under the rules, no new short positions can be taken in U.K.-listed financial services companies. While existing short positions don't have to be closed, they can't be increased.

Not HSBC

``Our short positions are taken on a passive basis the success of which will be determined by the merits of the particular company,'' the statement said.

HSBC Holdings Plc, the U.K.'s largest financial services company, is the only one of the five biggest that Paulson didn't disclose it was shorting.

Short selling is when investors sell shares they have borrowed on the hope the price will fall. If it does, they buy back the shares at a lower price, return them to their owners, and pocket the difference.

Amid financial sector turmoil, combined HP-EDS solutions

As we witness unprecedented turmoil throughout the world’s financial trading centers, the question in IT circles is: How will this impact the providers of systems, software and services? Not all vendors will fare the same, and those that possess the solutions — and have the track record and experienced personnel in place — will be more likely to become part of the new high finance landscape, and the new public-private solutions.

The timing of Wall Street facing some of its darker days comes as HP and the newly acquired EDS unit are combining forces in unique ways. Between them, EDS and HP have been servicing the financial and government sectors for decades. Combined, HP and EDS are uniquely positioned to assist potentially massive transitions and unprecedented public-private interactions.

To learn more about how HP and EDS will newly align, especially amid financial sector turmoil, BriefingsDirect interviewed Maria Allen, vice president of Global Financial Services Industry solutions at EDS. The discussion took place Sept. 22, 2008 at the Oracle OpenWorld conference.

The Allen interview, moderated by your’s truly from San Francisco, comes as part of a series of discussions with IT executives I’ll be doing this week from the conference. See the full list of podcasts and interviews.

Brett Paulson Joins Emerging Financial Technology Company

The former Chief Information Officer of The Clearing Corporation (previously The Board of Trade Clearing Corporation) in Chicago, Brett F. Paulson, has joined Avadhi Finance and Technology, Inc., an emerging leader in multi-asset trading platforms.

Avadhi founder, Paresh Malde, announced Monday, September 22, 2008, that Paulson was appointed CEO and a member of the Board of Directors. Malde remains company President, Board Chairman and will assume the role of Chief Operating Officer.

Paulson, a 30-year veteran in financial and technology service industries, led The Clearing Corporation to a historic restructuring of the capital and shareholder base. As President and Chief Operating Officer, Paulson helped orchestrate the convening of some of the world's largest members of the investment banking community in order to create innovative solutions aimed at the OTC clearing space as well as the exchange-traded derivatives marketplaces. Previously, Paulson held senior management roles at CS First Boston, IBM, Bank of America, Harris Bank and International Harvester. He holds an M.B.A. in Finance from DePaul University.

"Brett's industry leadership brings to Avadhi a significant moment in our rapid growth and expansion," said Malde of the privately held company, based in Okemos, Michigan. "His involvement and vision for the company is going to solidify Avadhi's position in the industry as a leading provider of trading solutions."

Avadhi Finance and Technology's trading platforms are found at some of the world's top brokerage firms.

Paulson said, "Avadhi has top-shelf products, a finely honed R&D, energetic personnel and an ambitious business agenda that I can enthusiastically embrace, adding my expertise, and ideally, accelerating its success. I am delighted to be joining such an innovative and talented performer in our industry."

ABOUT AVADHI FINANCE AND TECHNOLOGY

Avadhi Finance and Technology is emerging as a leading provider of technology products and services to the global financial services industry. Its flagship product is a comprehensive multi-asset trading platform with innovative features that addresses the needs of the sophisticated investors in the era of the fully electronic marketplace.

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What bank or financial institution is right for you

For most families, choosing a banking institution can be a very involved process even in the best of economic times. But mix in the challenges of military life, tough economic conditions, and a lack of consumer trust in many different industries, and doing so can become a daunting challenge.

To help make the process easier, Pioneer Services has developed a free article for military families on how to comprehensively, effectively, and quickly choose a bank or credit union. Covering what fees to look for, convenience and service, the article also provides links to regulatory and ratings agencies for easy reference.

“Military families move around a lot, and even those who have used the same bank for years should make sure they get the best deal,” said Joe Freeman, Chief Operations Officer of Pioneer Services, the Military Banking Division of MidCountry Bank. “Add in that the banking industry is facing some tough challenges, and then trust also becomes a factor. We decided to provide our service members some easy-to-use information on what to look for when picking a financial institution, as well as give them resources so they can fully trust whichever one they choose.”

The free article, and more than 30 others on a variety of personal finance topics, can be read at PioneerServices.com. Publishers interested in re-printing this article—or any others—free of charge can contact media@pioneerservices.com.

Pioneer Services, the military banking division of MidCountry Bank, provides responsible financial services and education to members of the Armed Forces that enhance their quality of life and financial independence. For more than 20 years, Pioneer Services has been a leader in military lending. They offer the protection and security of a personal loan with the speed and flexibility service members need. Through a network of offices and on the Internet, Pioneer Services offers loans, financial education programs, and supports military families and communities through a variety of partnerships, programs, and sponsorships.

World finance firestorm outpaces firefighters

With the flames of the financial crisis outrunning renewed central bank intervention and the nationalisation of United States insurance titan AIG, US media reports, meanwhile, said Morgan Stanley was looking for help.

The latest US drama was unfolding against a background of plummeting global stocks and yields, or interest rates, on US Treasury bonds as investors rushed for the safety of government debt instruments.

The Bank of Japan made the latest of a series of interventions to support the Japanese banking system, pouring in the equivalent of $23,9-billion, and the Russian stock market was closed even before trading opened, marking the third closure in three days.

The reports in New York said Morgan Stanley, one of the last two independent US-based investment banks, was negotiating a merger with another firm.

In London, the Halifax Bank of Scotland (HBOS) became the latest victim of the firestorm when British bank Lloyds TSB said it was acquiring this leading British mortgager in an all-share deal worth £12,2-billion.

The bail-out came after HBOS stocks had plummeted in wild trading on Wednesday.

The New York Times reported that Morgan Stanley was in talks to merge with Wachovia Corporation. Separately, CNBC business network said that the bank was in talks to be bought by the Chinese bank CITIC.

AIG, Lehman Collapses May Spur Financial Fire Sales

Lehman Brothers Holdings Inc.'s collapse and Merrill Lynch & Co.'s takeover by Bank of America Corp. are the first examples of what bankers say will be a spate of takeovers, as forced sellers seek an exit.

``There will be more bank consolidation and asset sales as people are forced to take tough decisions,'' said Philip Keevil, a senior partner in London at Compass Advisers LLP and former Salomon Smith Barney Inc. banker. ``It will be the weak offering themselves to the strong.''

Barclays Plc agreed today to buy Lehman's U.S. investment banking unit for $1.75 billion, three days after abandoning plans to acquire the entire securities firm. American International Group Inc., which received an $85 billion bailout from the U.S. government yesterday, is most likely to repay the loan by liquidating or selling assets, central bank officials told reporters on the condition of anonymity.

``We are now entering the next phase of the crisis, one that may require forced consolidation,'' UBS AG analyst Philip Finch said in a note to clients this week. The broker-dealer model used by investment banks is broken, and history suggests more banks will fail or be forced to merge following Lehman's collapse, he added.

Banks and insurers worldwide have booked more than $510 billion in losses and writedowns since the global credit crisis began about 13 months ago, wiping about $11 trillion from the value of global stocks along the way. That has prompted banks to seek cash injections and sell assets to shore up capital. Bank of America's $40 billion takeover of Merrill is the biggest element of $71 billion in acquisitions announced this month alone, almost twice the amount in the same period a year ago, data compiled by Bloomberg show.

HBOS Sale Talks

Lloyds TSB Group Plc, the bank that considered buying Northern Rock Plc before it collapsed, is in discussions to buy HBOS Plc after the mortgage lender lost three quarters of its stock market value this year.

The banks are in ``advanced talks,'' Edinburgh-based HBOS said in a statement today, without disclosing any details. A combination with Lloyds, based in London, would create a lender with a 28 percent share of the U.K. mortgage market, according to the Council of Mortgage Lenders.

``All these banks are going to have to clean up their balance sheets,'' said Bernard Gault, a London-based partner of Perella Weinberg Partners LLP. ``People are going to have to decide what to do next.''

Buyers may seek all or parts of Washington Mutual Inc., whose credit rating was cut to junk on Sept. 15, analysts and investors say. In the U.K., HBOS and Royal Bank of Scotland Plc were both earlier this year seeking to sell divisions.

Capital Raising

Seattle-based Washington Mutual has dropped 83 percent so far this year, leaving the lender with a market value of about $4 billion. Facing up to $19 billion in bad loans over the next 2 1/2 years, the bank may be forced to sell all or part of itself to raise capital, according to analysts including Bert Ely, president of consulting firm Ely & Co. in Alexandria, Virginia. The banks may also have to sell parts of a nationwide 2,300-branch network to raise capital.

Edinburgh-based HBOS has also been exploring a sale of its Australian units that may raise as much $5.7 billion, three people familiar with the plan have said.

``There will be those looking to take advantage of the crisis,'' said Charles Arsouze, a lawyer specializing in M&A, capital markets and securities law proceedings at Paris-based Fontaine Mitrani & Associates.

Edgy Buyers

Buyers are still skittish. In Europe, Royal Bank of Scotland has been struggling to sell its insurance units to bolster capital after reserves were depleted by writedowns and the purchase of part of ABN Amro Holding NV last year. Commonwealth Bank of Australia scrapped talks last month to buy ABN Amro's investment banking and corporate finance units in Australia and New Zealand, citing financial market turmoil.

UBS's Finch said banks that stand to benefit most from potential consolidation are Credit Suisse Group, JPMorgan Chase & Co. and HSBC Holdings Plc.

``The companies that are doing deals today are saying things have been way too expensive until now,'' said Gault of Perella Weinberg Partners. ``And it's time to do something.

Finance company rating agency closes

The demise of many finance companies in the past two years has led to the demise of a company that rates them.

Axis Ratings, a New Zealand owned credit rating agency that focused on the non-bank sector, is shutting up shop in part because business has dried up and also because it has to get accreditation itself.

To continue in this business we need confidence that, when the current upheaval in the market settles, there will be sufficient companies still funding out of the retail market to make a viable business out of credit ratings," managing director Ron Keene said.

The company was closing even though upcoming changes in Reserve Bank Amendment Act No 3 will require finance companies to be rated to gain Reserve Bank approval as registered deposit takers.

Axis Ratings itself requires accreditation as an approved rating agency to continue to rate finance companies and has been pondering how to get this.

"We saw the reality of strong support from an international rating company as essential to meet the Reserve Bank's requirements.

"In the event, Rapid Ratings International Inc, of whom we are a technology licensee, was not able to direct its attention to the New Zealand market at this time to give us the support required to satisfy the Reserve Bank's accreditation requirements," Mr Keene said.

Axis Ratings will continue to support and monitor ratings it has in the market until their expiry, but will not be undertaking any further rating assignments.

Gloom descends on US finance executives

America’s economy sunk to a four-year low amid mounting concern over high oil prices, waning consumer demand and inflation, according to a study. The findings, which are to be released on Friday, follow a spate of US economic data and corporate earnings reports in recent weeks that fuelled fears of a recession and damped hopes of an easing of the financial crisis.
Chief financial officers has also faded this year, and in the second quarter touched its lowest point since June 2004, a survey by Financial Executives International and Baruch College’s Zicklin School of Business showed.
Least half of those surveyed believed that the price of crude oil would climb to at least $160 a barrel in six months, or about a third higher than where it traded Thursday.
Economists hold a bleaker outlook for the second half of this year than was the case even three months ago.”
However, the study also showed that more than two-thirds of the 200 CFOs surveyed remained optimistic about their own companies’ prospects. Some even planned to increase technology and capital spending in the next year.
The steadiness in CFOs’ outlook toward their own companies may reveal that they are adapting to the turmoil and taking appropriate actions within their organisations,” said John Elliott, dean of the Zicklin School of Business at Baruch College.

Strategic Finance freezes funds

rugby union chairman Jock Hobbs is a director - are negotiating with the company's struggling Australian owner, Allco HIT, to buy the business.
The bid is being supported by an offshoot of Halifax Bank of Scotland.

The consortium claimed the buyout would secure Strategic's long-term future and reduce its reliance on retail investors to fund its lending on property developments.

It had been expected the sale would be concluded about the middle of next month. But Strategic told the Stock Exchange yesterday there had been "a further material decline in the property finance market and reinvestment rates" by investors.

Earlier this year Strategic had about 20,000 investors.

Negotiations with Allco HIT were continuing, but the proposed capital structure for the company as part of the ownership change would have to be considered by investors, the company said.

Suspending repayments would protect the position of investors while the purchase negotiations were completed, it said.

Credit rating agency Axis revealed yesterday that Strategic had asked for its rating to be withdrawn earlier this week.

Bank of the Carolinas Corporation Reports Second Quarter Financial Results

Aug 01, 2008 /PRNewswire-FirstCall via COMTEX/ ----Bank of the Carolinas Corporation (Nasdaq: BCAR), today reported financial results for the three and six months ended June 30, 2008.

For the three-month period ended June 30, 2008, the Corporation incurred a net loss of $259,000, as compared to net income of $592,000 in the second quarter of 2007. Diluted income (loss) per share was ($.07) for the second quarter of 2008 compared to income of $.15 for the comparable quarter of 2007. For the six-month period ended June 30, 2008, the Bank reported a net loss of $264,000 compared to net income of $1,372,000 for the same six-month period of 2007. Diluted income (loss) per share amounted to ($.07) for the six-month period ended June 30, 2008 compared to income of $.35 per diluted share for the same period of 2007.

In discussing the Company's results, Robert Marziano, President and CEO, stated, "We are very disappointed with our results, not only for the second quarter, but year-to-date in 2008. This is a trying economic environment, and our results reflect that. Along with many of our peers, Bank of the Carolinas has experienced increased levels of non-performing assets over the last year. However, based on our best determination of current market values, our bank has written down these assets to realizable amounts, reserved for potential losses and we remain well-capitalized. While excessive land development and construction credits have proven troublesome to the industry, these loans at Bank of the Carolinas remain relatively stable at a modest 14.6% of our portfolio."

Addressing liquidity and expense control, Marziano continued, "As evidenced by a $19.7 million increase in our savings balances at June 30, 2008 compared to June 30, 2007, a key focal point for our bank is to increase core funding so that we are less dependent on volatile liabilities and, therefore, less sensitive to interest rate swings. Additionally, we have reduced and will continue to reduce costs where doing so does not adversely impact our ability to serve our loyal customers. We regard our customers as our greatest asset."

The Company's non-performing assets were $14.4 million at June 30, 2008, or 3.6% of outstanding loans. While the reported amount is at a historically high level, it is inflated by the inclusion of one credit relationship of approximately $4.9 million for which 75% of any loss incurred by the Bank is guaranteed by the US Department of Agriculture. Presently the Bank expects no significant loss with regard to that particular credit. Excluding this credit, non-performing assets would amount to $9.5 million, or 2.3% of outstanding loans.

Principal factors leading to the decrease in net income for the three and six-month periods ended in 2008, relative to 2007, were a decline in the Company's net interest income, an increase in the provision for loan losses and increased non-interest expense. For the six-month period ended in 2008, the net interest margin declined to 2.75% from 3.35% in 2007. For the six- month period ended June 30, 2008, approximately $197,000 or 15.0% of the decline in our net interest margin was attributable to the loss of income associated with non-accrual loans. The increase in the provision for loan losses of $621,000 for the six-months ended June 30, 2008 relative to 2007 was related to additions to specific reserves for impaired loans the Company identified. While non-interest expense overall was stable from the first to second quarters of 2008, for the comparable six-month periods, 2008 non- interest expense increased approximately $1.1 million over 2007 levels. Salaries and benefits increased $761,000, occupancy expense increased $141,000 and other non-interest expense increased $204,000 for the current year period. The increased salary and benefit and occupancy expense levels are comprised of normal salary adjustments plus increased staffing and occupancy costs associated with two banking offices opened in mid-2007. The Company experienced growth in non-interest income of 9.7% and 7.7%, respectively, for the three and six month periods in 2008 versus 2007.

Total assets at June 30, 2008 amounted to $511.9 million, an increase of 12.1% when compared to the June 30, 2007 amount of $456.9 million. Net loans increased 14.1% over the prior year to $402.2 million, while deposits grew to $414.3 million, a 7.1% increase. The allowance for loan losses was 1.12% of total loans as of June 30, 2008, and the ratio of annualized net charge-offs to average loans was 0.40%.

Bank of the Carolinas Corporation is the holding company for Bank of the Carolinas, a state chartered bank headquartered in Mocksville, NC with offices in Advance, Asheboro, Cleveland, Concord, Harrisburg, King, Landis, Lexington and Winston-Salem. Common stock of the Company is traded on the NASDAQ Capital Market under the symbol BCAR.

This press release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections. Bank of the Carolinas Corporation undertakes no obligation to revise these statements following the date of this press release.

SC likely to have finance victims

Hanover Finance is the latest -- and biggest -- finance company to admit it has problems and announce it has frozen investors' money and started work on a restructuring plan.

The news from Hanover takes the toll of collapsed or troubled finance companies to 26 in the past two years with 23 of those in just the past 12 months.

However, South Canterbury Finance was yesterday rated highly for survivability.

The company is one of only three New Zealand finance companies with the "five survivability factors" according to managing editor for interest. co.nz Bernard Hickey.

The five factors he sees as the company's strength are their diversified lending, diversified funding, a strong backer, strong New Zealand bank funding line and an investment grade credit rate of BBB- or better. South Canterbury Finance has a BBB-rating while the other two companies Mr Hickey said have all five "survivability factors"

The only other companies Mr Hickey sees in the same category are UDC with an AA rating and Marac with its BBB- rating.

His chart of the 20 largest existing and failed New Zealand finance companies shows only the top three had survivability factors and a high enough investment grade credit rating, while Hanover Finance managed only one of the five factors, with its credit rating of BB+.

Maurice Matthews, of Matthews Financial Services, said clients were not wanting to invest in the finance company sector.

"People are running scared, and they're tending not to reinvest."

Mr Matthews said finance companies had always offered a margin over and above the banks, which took into account the relative risks, but said people had to make a judgment on whether they were being adequately compensated for the risk they were taking on.

"I'm sure there will be some Hanover money around South Canterbury, but obviously the bulk of South Canterbury money is with the local firm."

Mr Matthews said the volatile market meant that the ultimate aim for investors had changed slightly.

"The return of your capital is paramount now, not the return on your capital."

Stephen McFarlane of One to One Financial Management, said most prudent financial advisers had been unwilling to use finance companies for several months, if not a year or more.

"And there's not a return big enough in the world to put my own money in a finance company today."

The collapse of the various finance companies lent weight to the principle of diversification. Mr McFarlane said some of the people who had invested in finance companies had done so without seeking advice.

"I've come across people in the community who have done it themselves -- one person had $100,000 invested across five different finance companies -- they've all collapsed."

However, Mr McFarlane said it was important to realise that in many of the finance company collapses, the companies were working towards a return to investors, so they should get most, if not all, of their money back.

"Yes, it's bad news, but it's not the worst possible news."

Peter Hayes, from Peter Hayes and Associates, said people were not reinvesting in finance companies.

"Two years ago, even one year ago, things were a little bit busier in that area."

Now he said he would be telling people if they couldn't sleep at night, to leave their money in the bank.

Finance companies still offering Hanover-style returns

Finance companies are still offering high interest rates, despite a string of failures in the sector leaving $3.3 billion owed to investors.

Last week, the Weekend Herald's table of finance companies showed Hanover Finance was offering investors a year deposit rate of 10.05 per cent and a three-year deposit rate of 10.80 per cent.

Hanover then became the 25th finance company to crash when it froze repayments on $544 million of investors' funds on Wednesday.

The latest figures released by interest.co.nz show a further 10 finance companies are offering term deposit rates of 10 to 13 per cent.

Sharebroker Chris Lee, managing director of Projects Resources, said there were some high-risk companies still lending and "it just doesn't make sense to put your money there".

But he said it was difficult to pull all finance companies under one umbrella.

"The sad thing is the public may end up dragging money out of perfectly good companies for no reason at all other than emotion."

Failed finance companies had either performed "rotten" business, or had fallen under the model of lending long-term and borrowing short-term, he said.

Bernard Hickey of website interest.co.nz said risky finance companies were not offering high enough returns to justify the investment.

This came down to a "chicken and egg" situation: risky finance companies were reluctant to offer high interest rates because investors would think it must be too risky and would put their money elsewhere, Mr Hickey said.

Mr Lee agreed and said an investor putting money into a low-rated company offering 12 per cent interest took a significant risk.

"If you can get 8 per cent from the banks and 10 from a good finance company with a proper credit rating, then a company with not as high a rating should be rewarding investors with a much higher rate."

Only four New Zealand finance companies sport a credit rating: UDC Finance, Marac Finance, South Canterbury Finance and Equitable Mortgages.

A credit rating is a formal assessment by an independent credit rating firm where analysts investigate the company, assess the strength of its balance sheet and give it a rating.

The Government intends introducing legislation that will make credit rating necessary for finance companies. Until then, investors will have to do their own research.

The only problem, according to Mr Lee, is that financial literacy is generally low in New Zealand - many investors do not understand credit ratings or the jargon in investment statements, are guided by television advertising and attracted by media personalities.

He said the market was the worst he had seen it in his 30-year career and his greatest advice to investors was never to put more than 10 per cent of their money into a company.

Market Chatter -- Corporate finance press digest

LONDON, July 25 (Reuters) - The following corporate finance-related stories involving U.S. and European companies were reported by media on Friday.

U.S. investment bank JP Morgan (JPM.N: Quote, Profile, Research) and National Australia Bank (NAB.AX: Quote, Profile, Research) have held talks about forming a consortium to break up British bank HBOS (HBOS.L: Quote, Profile, Research), the UK's Telegraph newspaper reported.

Two private equity firms are considering investments in BankUnited Financial Corp (BKUNA.O: Quote, Profile, Research), weighed down by a huge portfolio of adjustable-rate mortgages, the Wall Street Journal said on Friday, citing people familiar with the situation.

For Deals of the Day, click on [nSP344109] (Reporting by Douwe Miedema; Editing by Louise Ireland, Paul Bolding)

Property Finance Deals

CapitalSource Healthcare REIT in Chevy Chase, MD, intends to file a registration statement with the Securities and Exchange Commission within the next 30 days for the initial public offering of CapitalSource Healthcare REIT's common shares. The initial public offering of common shares in CapitalSource Healthcare REIT is expected to raise at least $300 million for CapitalSource. The REIT will invest in income producing health care-related facilities, principally long-term skilled nursing facilities, through triple-net lease structures.

Digital Realty Trust Inc. in San Francisco plans to sell 5 million shares of its common stock in an underwritten public offering. Digital Realty intends to utilize the net proceeds from the offering to temporarily repay all or a portion of its borrowings under its revolving credit facility, to acquire additional properties, to fund development and redevelopment opportunities and for general corporate purposes. Separately, Digital Piscataway LLC, an indirect subsidiary entered into an $80 million secured mortgage financing with respect to 3 Corporate Place in Piscataway, NNJ. The loan bears interest at 6.72% per year, matures on Aug. 1, 2011, and is subject to two one-year extensions.

Deka Bank provided a $90 million acquisition loan and Fillmore Capital Partners a $50 million mezzanine loan for the recently opened Renaissance Boston Waterfront Hotel in Boston's vibrant Seaport District. HFF senior managing directors Riaz Cassum and Michael Tepedino (HFF New York), along with director Greg LaBine, arranged the financing for Loeb Partners Realty. Loeb Realty Partners is a privately held real estate company with a current portfolio of more than 15 million square feet of income producing real estate.

Freddie Mac provided senior mortgage acquisition financing of $46 million for The Park at Kingsview Apartments, a 326-unit multifamily complex in Germantown, MD. Financing was based on a 7-year term. The financing amounted to 70% of the cost for the borrower, which consists of a local partner and an offshore investor. Freddie Mac went from application to close in 18 days a deal fell through with another lender. Christopher Feeley, senior vice president and managing director, Gary McGlynn, senior vice president and managing director, and Frank Relihan, vice president of NorthMarq Capital Inc.'s (NorthMarq) Washington, DC Regional office arranged the financing.

Aviva Capital Management provided $21.61 million of financing at a permanent fixed rate of 5.35% for Powerline Business Park. The loan term is five years with a 30-year amortization, and a loan-to-value of 50%. The industrial park has two locations, totaling 395,720 square feet, at 4100 N. Powerline Road in Pompano Beach, FL, and 6601 Lyons Road in Coconut Creek, FL. Marshall Smith, executive vice president for Thomas D. Wood and Company, arranged the financing.

Grosvenor Investment Management US Inc., on behalf of a pension fund it advises, provided first mortgage financing of $7.5 million for 610 Business Park in Brooklyn Park, MN. Financing for the 78,190-square-foot single-tenant industrial property was based on a 10-year term with a 30-year amortization schedule and was arranged for through NorthMarq Capital Inc.'s (NorthMarq) Minneapolis Regional office. Patrick Minea, senior vice president and managing director arranged the deal.

Minnesota Life Insurance Co. provided $6 million in financing for Regent Properties at a permanent fixed rate of 6%. The loan term is 10 years with a 30-year amortization, and a loan-to-value of 59%. The 348,773-square-foot industrial building was built in 1997 and has two locations, 15371 Roosevelt Blvd. in Clearwater, FL, and 11211 69th St. in North, Largo, FL. Marshall Smith, executive vice president for Thomas D. Wood and Company, arranged the financing.

Fifth Third Bank loaned Odyssey Marine Exploration Inc. $2.6 million at a variable interest rate equal to the prime rate plus 0.75% per annum. The loan matures on July 11, 2013, and requires Odyssey to make monthly principal payments in the amount of $10,750 plus accrued interest. The loan is secured by a first mortgage on Odyssey's principal executive offices at 5215 W. Laurel St. in Tampa, FL.

Property Finance (July 20-26): Dealing with 2008 Maturities

Macerich Clears Out Most 2008 Maturities
The Macerich Co. in Santa Monica, CA, closed five major loan financings and a commitment on a sixth financing. The total loan amount on all six transactions is $1.045 billion and the five transactions that recently closed totaled $895 million and generated excess proceeds above the prior loans of approximately $576 million, which were used to pay down the company's maturing line of credit.
Macerich closed on a $100 million financing of The Mall of Victor Valley, a regional mall in Victorville, CA, at an initial rate of 4.32%. Some of the loan proceeds paid off the former loan of approximately $51 million with an interest rate of 5.25%. This floating rate loan has an initial term of three years extendable to five years.
Westside Pavilion, a 740,000-square-foot regional mall in Los Angeles was refinanced with a new $175 million five-year loan with an initial interest rate of 4.45%. Some of the loan proceeds paid off the former loan of $91.6 million with an interest rate of 6.74%.
The company closed on a $150 million loan on the recently opened SanTan Village regional shopping center. The loan has an initial three-year term, extendable to five years. The initial funding was approximately $117 million at an initial interest rate of 4.73%. Approximately $33 million of additional proceeds will be distributed as the remaining construction costs are incurred. Prior to this loan the asset was not encumbered by a mortgage.

A $170 million, 6.76% seven-year fixed-rate loan was placed on Fresno Fashion Fair, a super regional mall in Fresno, CA. A portion of the proceeds was used to pay off the previous loan of $63.1 million bearing interest at 6.52%.
The company placed a $300 million combination construction-permanent loan on The Oaks, a super regional mall in Thousand Oaks, CA. The initial funding was $220 million at an interest rate of 4.29%. Approximately $50 million of additional proceeds will be distributed upon completion of the construction and another $30 million upon stabilization. This floating rate loan has an initial term of three years.
Lastly, the company entered into a commitment for a $150 million, seven-year, 6.11% fixed interest rate loan on Broadway Plaza in Walnut Creek, CA. The loan is expected to close in September and part of the proceeds will be used to pay off the current loan of $59 million (with a 6.68% interest rate). Upon completion of this financing the company will have less than $100 million of remaining maturities for 2008 and expected available capacity under its line of credit of more than $625 million.

Nat Rubin Joins Peak Finance Company as Commercial Loan Officer

Woodland Hills, CA (PRWEB) July 25, 2008 -- Peak Finance Company (http://www.peakfinanceco.com) announced the hiring of its new Commercial Loan Officer, Nat Rubin.

His primary focus will be on promoting lending products that have a unique advantage in the marketplace, as well as delivering the best options for Peak's clientele. "Peak is pleased to have Nat join our team of professionals and we look forward to growth in our commercial loan sector with his experience and guidance," says CEO Eli Tene. "We feel that with our extensive product offerings, business will continue to grow despite the current credit crunch, and Nat will become a pivotal part of that growth. Peak has been able to adapt and excel in turbulent conditions by adopting a flexible and forward looking strategy."

Rubin comes to Peak Finance from Meridian Capital Group, where he served as one of the firm's leading Commercial Finance Officers. With expertise in loan underwriting, negotiations, legal administration, and a vast network of premium clients across the globe, Rubin will be an invaluable member of the Peak team of professionals. Prior to Meridian Capital Group, Nat worked as a legal administrator for American Stock Transfer and Trust Co. of New York.

Creating more options for clients as well as improving the end user's experience is evident in the plans Rubin is developing. With his extensive experience, Rubin was drawn to Peak's integrity, diversity of services, and its creativity in making deals work. "Peak was appealing because they are a unique group of affiliate companies that presented tremendous continual growth despite what the economy and specifically the real estate market is experiencing today." says Rubin. "Peak's long-term investor relationships and private money resources allow the company to offer one of the widest arrays of products in the industry, giving us unparalleled advantage."

Peak Finance Company is a commercial mortgage company that provides mortgage banking services and an array of competitively priced mortgage programs. Not only is Peak Finance a mortgage broker, but it is a direct lender that customizes beneficial programs depending on each clients' individual needs.