Burbank Finance Christchurch

Burbank Finance was a prominent finance company in New Zealand, with a significant presence in Christchurch. Although no longer operating independently, its historical impact on the city’s lending landscape and its eventual downfall are worth examining.

Founded in 1973, Burbank Finance grew steadily over the years, offering a range of financial products and services. In Christchurch, it became known for providing finance options for property development, commercial lending, and consumer finance, filling a niche for those who may not have qualified for traditional bank loans. This included small businesses, property investors, and individuals seeking personal loans.

Burbank Finance’s approach often involved higher risk lending, particularly in the property sector. While this allowed them to generate higher returns, it also made them more vulnerable to economic downturns. As the Christchurch property market boomed in the early 2000s, Burbank Finance participated actively, financing numerous developments. However, this reliance on property exposed them significantly when the global financial crisis (GFC) hit in 2008.

The GFC triggered a sharp downturn in the property market, leading to a reduction in property values and difficulties for borrowers in meeting their repayments. This had a severe impact on Burbank Finance’s balance sheet. The company struggled with increasing bad debts and diminishing liquidity.

In 2008, Hanover Finance, another major finance company in New Zealand, acquired Burbank Finance. This acquisition was presented as a move to stabilize Burbank’s financial position and protect investors. However, Hanover itself was facing significant financial challenges, and the acquisition ultimately did not resolve Burbank’s underlying issues.

Ultimately, both Hanover Finance and Burbank Finance entered into moratorium in 2008, freezing investor funds. This had a significant impact on thousands of investors, including many in Christchurch who had entrusted their savings to the company. The collapse of Burbank Finance, along with other finance companies, contributed to a loss of confidence in the financial sector and had a lasting impact on the Christchurch community.

The failure of Burbank Finance serves as a cautionary tale about the risks associated with high-risk lending and the importance of robust regulation in the financial sector. Its story highlights the vulnerabilities of relying heavily on a single sector, such as property, and the consequences of insufficient risk management.

While Burbank Finance no longer exists, its legacy remains a significant part of Christchurch’s financial history. The lessons learned from its failure continue to inform discussions about financial regulation and investor protection in New Zealand.