Wednesday 25th of June 2008

St Laurence’s decision to pull the pin on property lending has surprised many in the industry, including myself. The company was always regarded as one of the better operators in the market, run by people who were up front and worked on the refreshing ethos of putting the investor first. That is what was refreshing when talking to St Laurence boss Kevin Podmore last night. He describes the move as acting early and putting something in place which was good for everyone including investors, staff and the shareholders in his business. He said, as reported on Good Returns, that hopefully everyone can be paid back and there will even be something left over for the company’s shareholders. This attitude is in marked contrast to other companies, like Bridgecorp, which seem to be in denial over what has happened and how much damage they have caused people. Podmore’s comments, when I asked him how does he feel about everything, sums the situation up well. “It’s a bit of a relief actually,” he said. Looking at the St Laurence issue with a wider view it is clear that the commercial property/development sector is stuffed and that other finance companies with exposure to it must be suffering too. Again Podmore’s comments are revealing. He thinks the finance company sector, especially when it comes to property finance, will disappear. Strong words from a man who generally understates everything. Another issue which I am wondering about is this. None of the companies which are in trouble have a proper rating. Maybe there is something in this? It seems to me some of the companies which have got into trouble could have sought ratings and in doing so that would have fitted their corporate philosophy, however they haven’t done so. My, early, thoughts are that they didn’t go for ratings because they knew the result wouldn’t be satisfactory? It’s a thought I am developing some more, but the early conclusion, if I am right, is that maybe ratings do mean something?