Broadbank base for new bank?

Press, 17 January 1986, Page 8

Broadbank base for new bank?

By

SIMON LOUISSON

in Wellington

Fletcher Challenge has sold Broadbank Corporation and Challenge Computers to the Government Life Insurance Corporation for an undisclosed sum. Broadbank has assets of S93IM, of which all but SB.SM are financial. This follows the sale last month by FCL of Marac to NZI and the disposal in Australia of Broadlands Perth. Broadbank and Government Life will continue to operate as separate companies but will be able to offer wider range of services. The managing director of Government Life, Mr Hutton Peacock, said the move was part of a major development plan to expand its financial services and increase its customer base. The 150,000 Broadbank customers bring the combined client base to more than 500,000 and total funds in excess of S2B. The purchase requires the consent of the Commerce Commission. Mr Peacock said that Government Life recognised the need to diversify two years ago and began last year with the setting up of the Tower Equity Trusts. He said it seems likely that Broadbank will be an applicant for a banking licence considering that it is already into personal banking, but that is a matter for the Broadbank board to decide.

The chairman of FCL, Sir Ronald Trotter, said the sale reflected a commitment to react decisively to

the changing economic environment. It would mean a superior return to shareholders.

Deregulation and internalisation of financial services required that companies such as Broadbank and Marac had to be part of a larger financial group to remain competitive, he said. Broadbank’s profit and reputation suffered last year when it was revealed that the company lost S22M through unauthorised foreign exchange transactions.

The assistant managing director of FCL, Mr David Sadler, said the losses had no bearing on the sale. “To be strong in any particular sector was desired. There is good money to be made in the financial sector, but Broadbank and Marac were not in that

position,” he said. Government Life is a mutual insurance group owned by its policy-holders. The Minister in charge had no input into the decision to buy Broadbank.