Four major fin services firms a “high to severe” insolvency risk: SV Partners
Some of Australia’s largest financial services firms are on the brink of insolvency following the seemingly continuous revelations of misconduct uncovered by the Royal Commission this year, according to insolvency specialists, SV Partners.
The SV Partners Commercial Risk Outlook Report, which analysed the overall conditions of Australian business activity based on commercial bureau data, found that one per cent of the financial services industry is at risk of failure, including eight companies with a turnover of more than $50 million annually.
These companies included two with a turnover of over $1 billion and two with turnovers of $500 million to $1 billion, all of which SV Partners classed as at “high to severe risk” of financial failure.
While the percentage of businesses at risk had declined since the previous risk, the number of large businesses at risk had doubled.
“Our report indicates that there are some large financial institutions at risk, which is a significant concern not just for the shareholders and employees of those businesses, but for the economy more broadly,” SV Partners managing director, Terry van der Velde said.
He pointed to the potential implications for businesses and households nationally of collapses in the finance industry as concerns, such as a constrained and more expensive borrowing environment.
van der Velde said that financial services firms thus needed to seek help urgently to address their solvency issues.
“While the Financial Services Royal Commission is subjecting these businesses to a large amount of negative publicity, businesses should have strategies to weather PR disasters through the effective management of liabilities and diverse income streams,” he urged.
“All businesses need to ensure that they are carrying sustainable amounts of debt and benefiting from reliable income streams.”
AUTHOR
Hannah Wootton
Recommended for you
Net cash flow on AMP’s platforms saw a substantial jump in the last quarter to $740 million, while its new digital advice offering boosted flows to superannuation and investment.
Insignia Financial has provided an update on the status of its private equity bidders as an initial six-week due diligence period comes to an end.
A judge has detailed how individuals lent as much as $1.1 million each to former financial adviser Anthony Del Vecchio, only learning when they contacted his employer that nothing had ever been invested.
Having rejected the possibility of an IPO, Mason Stevens’ CEO details why the wealth platform went down the PE route and how it intends to accelerate its growth ambitions in financial advice.
