COUNTRY investors in the failed Banksia Securities will get a ''meaningful'' amount of their $665 million back, receivers say.
McGrathNicol is reviewing Banksia's business and loan portfolio with the help of acting chief executive Warren Shaw and will prepare a plan to return as much as possible of investors' money.
Investors' funds are not covered by government guarantees because Banksia is not a bank.
Premier Ted Baillieu said that while the collapse was a great concern to the government as well as many towns in regional Victoria, ''Banksia is a matter for the Commonwealth and ASIC''.
But Mr Baillieu said Victoria would work with the federal government if emergency assistance became necessary.
Banksia mortgage holders are expected to keep up their repayments while the receivers work out a strategy.
Up to a dozen Banksia shopfronts across regional Victoria are likely to close
The trustees of Banksia Securities called in receivers after an internal review found Banksia had to make a ''material increase'' in money set aside to cover mortgage defaults.
McGrathNicol is confident that people who invested with Banksia will get some of their money back.
''Currently, Banksia has substantial liquid assets. Given this substantial liquidity position, the receivers will immediately explore how best they can start making payments to debenture holders,'' McGrathNicol said.
Banksia sells investment products and then lends that money as mortgages or commercial loans. Receivers will hold a a meeting with investors within five weeks and hope to issue an interim distribution within eight weeks.
The Saturday Age believes a sudden realisation by a new management team about a long-term decline in the quality of loans, rather than a single large event, triggered the decision to freeze assets.
Banksia has more than 1000 loans, mostly to farmers, families and small companies in regional Victoria. It does not make loans over $10 million.
It does report high levels of overdue mortgage repayments. More than 10 per cent of $500 million worth of mortgages were more than 90 days overdue at June 30, 2012. And $24 million worth of mortgages were past due or impaired, according to its 2011-12 annual report.
It has emerged that auditors gave Banksia Securities a clean bill of health less than four weeks before its collapse. Auditors Richmond Sinnott and Delahunty of Bendigo audited and signed off on Banksia's financial records since at least 2009.
Banksia is not regulated by the Australian Prudential Regulation Authority because it is not a bank. This means deposits are not covered by the government's bank guarantee.
Banksia is popular in regional towns because of its physical presence and history. Patrick Godfrey started the business in 1968 as Kyabram Housing Investments and in 1999 it merged with other small investment companies to form The Banksia Financial Group.
He was managing director for 46 years until August this year when he stepped aside and Mr Shaw became chief executive. Mr Godfrey remains on the board.
Mr Baillieu has been briefed by the receivers.
''Our concern is with the interest of investors and with the impact on the regions. There are likely to be significant impacts,'' Mr Baillieu said.
The Rural Finance Corporation would provide independent advice to investors, he said.
Banksia does not have a credit rating because it is an unlisted non-bank lender and a private company.
This makes it riskier than investments with institutions that are regulated by the Australian Prudential Regulatory Authority and have credit ratings or companies listed on the securities exchange that have continuous disclosure obligations.
With Chris Zappone and Ben Millar