While other finance companies have failed, some due to lending to related parties, SCF has continued to grow, but now questions have been asked of the Timaru-based company and its practice of lending to related parties.
SCF chief executive Lachie McLeod said the company had lent to related parties for 30 to 40 years due to its chairman Allan Hubbard's involvement, but Mr McLeod said an effort would be made to reduce the extent of that lending.
At the last balance date, related party lending accounted for about $170 million of the company's $1.6 billion loan book.
Mr McLeod said most of the related party lending was to subsidiary companies Scales Corporation, Helicopters NZ and Dairy Holdings, but any consideration was done at arm's length and had to be approved by the SCF Credit Committee and the full board.
He said the companies had strong balance sheets and were in established, core sectors.
But, he accepted investors and some in the finance sector had concerns, and SCF would take action to reduce lending,"Certainly, the focus will be to push that back over time."
Mr McLeod said there would be a transition period given the companies had sourced funding from SCF, and banks were concentrating on dealing with existing clients rather than looking for new customers.
He said there were business opportunities, especially lending to the rural sector, which SCF would like to double from the current $140 million.
The rural sector was something SCF understood.
"It is something we understand very, very well and are going to slowly build up over time."
The company had about $45 million loaned to the dairy sector, and despite concerns in some quarters about the level of lending to the dairy sector which had reached $27 billion, Mr McLeod said the company would like to increase its exposure to about $100 million.
"We still believe there are some better dairy farmers out there struggling with banks, that gives us an opportunity."
SCF had about $80 million in consumer lending and $600 million to businesses, loans of up to $500,000 mostly to small operators in rural areas.
It has had $300 million lent for plant and aviation and $750 million in property, a sector he described as "sticky and will take some time to work through".
