South Canterbury Finance
Failure of the Hubbard empire
Chapter 6
South Canterbury Finance (SCF) started in 1926. Allan Hubbard purchased it in the 1950s. Hubbard was highly respected, loved in the South Island, and helped hundreds of businesses. Apart from the great depression SCF had never seen an unprofitable year. Hubbard started the business lending conservatively and mainly to regional New Zealand. Unfortunately Allan Hubbard was not someone who easily let go of the businesses he owned. He surrounded himself with people immensely loyal to him and disliked the processes most large entities took for granted in the running of their businesses. He only hired his first CEO in 2003 - without approval of his board. The new CEO and his management team pursued aggressive growth being spell bound by the potential gains in the property market, like most other finance companies at the time. While the Global Financial Crisis was more severe than any one could have predicted, the cracks within SCF were large. Even after finance companies had collapsed in New Zealand and the USA, SCF continued investing into ever riskier ventures, particularly with the protection or the government’s retail guarantee scheme. The collapse of SCF, the role of the government, the impact of the unsuccessful serious fraud office legal case, the securities commission recommendations for statutory management of other Hubbard businesses, and more, add a further level of intrigue to the largest failure in NZ history.
