New Zealand news 13/05/99 – EquitiLink shuts up shop

The New Zealand office of Equitilink has closed its doors after more than 10 years in business.

Head of Equitilink (NZ), Richard Flinn says the move reflects the relative lack of scope for growth in New Zealand compared to Australia.

"An Australian company always thinks how much business is possible in New Zealand compared to Australia," Flinn says.

"While funds could grow quickly in New Zealand in a short space of time you have to ask what the situation will be in five years time and whether it's worth maintaining a presence here."

The closure of the New Zealand office will only affect Equitilink's wholesale clients as the company sold its retail business to Challenger International last year.

"Retail investors in New Zealand can still access Equitilink's investment management expertise via Challenger funds," Flinn says.

He says Equitilink will service its three New Zealand wholesale funds management clients from Sydney.

Other Australian-based fund managers, such as MLC and Rothschild, have also closed their New Zealand offices recently.

Flinn says this trend will probably continue as the convergence of the Australian and New Zealand funds management business, equity markets and economies picks up pace.

"In reality there isn't a pure domestic market in New Zealand. About 60 per cent of the NZSE 40 is traded across the Tasman," Flinn says.

"Increasingly, both the Australian and New Zealand managed fund markets will merge too. Even in the last year I have noticed a significant change in sentiment amongst asset consultants here towards treating the Australasian market as the domestic market."

Flinn says he will not be crossing the Tasman to work with Equitilink but will continue to work in some capacity within the New Zealand financial services industry.

Colonial returns to property

Colonial First State (NZ) has forecast returns of more than ten per cent per annum for its new listed property trust at least until 2005.

Chairman of Colonial First State Property, Bruce Abraham, says the current economic environment lends itself to a rising demand for quality properties and attractive yields.

The Trust hopes to raise $145 million from a public float of a diversified portfolio of 14 commercial, industrial and retail properties located in New Zealand's three largest cities.

Abraham says Colonial now favours listed property vehicles over direct ownership as the best way of gaining exposure to the property market.

He says the Trust will also benefit from the listed property expertise of Colonial's Australian operations, which manages more than $1.9 billion property assets.

Adviser discipline on election issue

New Zealand's financial planning and advisory community needs legislation similar to Australia in order to protect the public adequately according to Roly Metge, strategist with the New Zealand First Party.

Metge says New Zealand First has asked the three main financial service industry bodies; the Financial Planners and Investment Advisers Association (FPIAA), the Investment Savings and Insurance Association (ISI) and the Health Funds Association (HFA), to comment on proposals for compulsory registration of all financial advisers.

"I have plenty of examples of financial cowboys taking advantage of investors, especially elderly people. I've got a case in front of me right now where someone has lost $200,000. The industry has been given a chance to regulate itself and it hasn't worked," Metge says.

He argues for a "middle handed" approach which will give the industry bodies more teeth to deal with advisers who don't meet ethical and moral standards.

Metge says the Australian Financial Planning Association (FPA) model, where planners are more closely regulated, could work well in New Zealand.

"We should have worked more closely with the FPA in the past," Metge says.

He says all submissions to New Zealand First must be in by May 19. A more detailed policy will then be announced and discussions entered into with other political parties.

"It is a valid, important issue that affects the whole country and we intend to make it an election issue," says Metge

"At the end of the day it is a social fabric argument. New Zealand needs to regain the basis of trust and community."

However, ISI chief, Vance Arkinstall questions the need for any legislation and the efficacy of a compulsory registration scheme.

"We're prepared to look at the proposals but we need to be convinced there is a problem and that registration will achieve the result its sets out to do," Arkinstall says.

He also says many of the problems in the advisory industry should be addressed by the recently introduced disclosure regime which financial advisers now operate under.

Co-president of the FPIAA, Denys Wright, has not yet seen the proposals but says the FPIAA is developing its own internal disciplinary procedures.

'Spiteful' case is looking up for Tower

The Privy Council in London has rejected an attempt by the Guinness Peat Group (GPG) to re-examine the legality of Tower's by-laws.

If the Privy Council had accepted GPG's arguments, Tower's 250,000 subsidiary members, chiefly in Australia, would have been stripped of their rights and could not have profited from Tower's proposed demutualisation.

However, the Privy Council still has to hear one more argument from GPG against Tower's demutualisation plans. This hearing has been set down for June 23.

Head of Tower, James Boonzaier, says the latest Privy Council decision puts the company on track for demutualisation in September or October this year.

"The futile and spiteful campaign against Tower's members is getting the treatment from the Courts which it deserves. It is a waste of GPG/Tyndall shareholders' money and is clearly not being pursued for any commercial reason," Boonzaier says.

"Now that the sale of Tyndall to Royal and SunAlliance is a virtual certainty, we hope that common sense will prevail and that Royal and SunAlliance will instruct Tyndall to drop this futile litigation."

However, head of Royal and SunAlliance, Alan Bradley, says the GPG/Tyndall court case is "nothing to do with us".

He says while an immediate merger with Tower is not on the company's agenda it is still a long-term possibility.

BNZ boss heads across the Tasman

Head of the Bank of New Zealand (BNZ) Financial Services Group, Terry Millett, will transfer to a new position with BNZ parent company, the National Australia Bank (NAB) in Melbourne.

Millett, who has been head of BNZ Financial Services Group for about a year, will take on the role of program adviser, private banking for the NAB in June.

His replacement in New Zealand is expected to be announced before he leaves.

"The process of looking for a replacement in going on now, both internally and externally and within New Zealand and overseas," Millett says.