La Trobe Financial
La Trobe Financial is an Australian diversified wealth manager.[1][2]. It offers real estate credit, fixed interest investments and private wealth management. The President and CEO is Mr. Greg O'Neill. La Trobe Financial's head office is located in Melbourne, with corporate offices in Sydney, Shanghai and Hong Kong.
 | |
| Private Limited | |
| Industry | Wealth & Funds Management, Financial Services |
| Founded | 6 August 1952 |
| Headquarters | 333 Collins Street, , |
Number of locations | Sydney, Melbourne, Shanghai, Hong Kong (China) |
Key people | Greg O'Neill OAM (President & CEO) Rowan Donohoue (CRO) Rob Clough (CFO) Martin Barry (Treasurer) Chris Andrews (CIO) Cory Bannister (CLO) |
| Products | Real Estate Credit Fixed Interest Investments Funds & Wealth Management Insurance Services |
| 1HFY20: A$318 million FY19: A$513 million FY18: A$361 million | |
| AUM | A$11 billion (FY18:5.6bn) |
| Total equity | Net Assets: FY19 A$185m (FY18 A$149m) |
| Owners | Blackstone LP NYC 80% Greg O'Neill 20% |
Number of employees | 380 |
| Divisions | Real Estate Credit Private Wealth Treasury Services People & Marketing Finance Tech-Ops Risk & Governance |
| Website | www.latrobefinancial.com |
History
La Trobe Financial was established in 1952 in Australia and initially operated as a specialist residential lender and business partnership between Kel O’Mullane and Ray O’Neill. Attributed as one of the fastest growing permanent building societies in Victoria in the 1970s with a network of 9 branches and over 230 agents and AUM of $28million[3]. It was eventually de-mutualised after Ray O’Neill bought out his co-founding business partner in the early 1980s.
La Trobe Financial specialise in originating, underwriting and managing granular assets being both traditional residential and commercial mortgage loans.
La Trobe Financial uniquely fund these assets via institutional funding, a large retail credit fund, and a global capital markets bond program.
Since establishment in 1952, the business has scaled to be one of the largest Australian non-bank institutions currently managing A$11 billion with more than 380 staff. During that time La Trobe Financial has assisted over 150,000 individuals, and have cumulatively managed investment funds from wholesale and retail sources in excess of A$22.76 billion; this has been carried out without loss to any institutional or pooled retail investor.
La Trobe Financial currently review A$8 billion of asset investment opportunities annually.
Operations
The company operates through two core entities: La Trobe Financial Services an unlisted proprietary (private) company, holder of Australian Credit Licence "ACL" 392385 [4], responsible for group credit asset administration and servicing, third party outsourcing services, custody services, group insurance sales, and wholesale institutional funding mandates. The second core operational entity is La Trobe Financial Asset Management a public (unlisted) company and holder of Australian Financial Services Licence "AFSL" 222213[5], responsible for all retail investments in the La Trobe Australian Credit Fund and it's Wealth Management operation.
Distribution
La Trobe Financial utilise over 3,000 independent finance brokers and 867 independent financial advisers as their third party product distribution across Australia, with full time Business Development Managers (40) and an adviser support team (15).
In 1994 in recognition of its range of products the Housing Industry Association (HIA) appointed La Trobe Financial as exclusive financier for its national display village for two years, and La Trobe Financial opened its service desk seven (7) days a week[6].
Loan Products
Assets being managed are Cash, Mortgage fixed interest Investments, and Bonds (residential mortgage backed securities). Current Assets Under Management are 3% cash, 70% mortgages and 27% bonds. The mortgage book is composed of (14% - super prime residential mortgages), (23% - prime mortgage), (49% - near prime commercial and residential) and (11% - specialist residential mortgages). Products cater for a wide range of borrower and private wealth management situations, the average group wide loan-to-valuation ration is a conservative 64.1%.
Asset Performance
La Trobe Financial performs in line with the broader market peers and its average per-loan loss experience is less than its peer group. It is a function of their conservative asset underwriting and 80% LVR maxima. Many traditional bank customers moved to La Trobe Financial as a result[7].
Funding Strategy
La Trobe Financial has perhaps the most diversified real estate credit funding program of all peer's operating in Australia incorporating:
- A$3.7 billion of term debt facilities from local and international financiers;
- a A$5 billion dollar Credit Fund featuring five investment account types including a 48 hour cash management account, a 90 day term account, a 12 Month Term Account, a Peer to Peer (P2P) investment option, and a 4 Year (Bond Investment) account. The retail Credit Fund is independently rated; and
- a complementary A$3.6 billion publicly rated capital markets programme issuing Residential Mortgage Backed Securities (RMBS).
La Trobe Financial first accessed debt capital markets in 2014 with the goal of broadening their funding capabilities with an RMBS programme as one component of the Group's overall $6bn annual term debt funding program.
The Global Financial Crisis (GFC)
In early 2007, La Trobe Financial employed over 120 staff and was originating around A$100m per month of residential and commercial mortgage business. The market for mortgage backed securities (RMBS) changed radically in July 2007, the start of the Credit Crunch. From this point onwards, risk aversion in the debt capital markets increased sharply, and the RMBS market effectively shut in early 2008. A large non-bank mortgage lender (RAMS) failed in August 2007, the first major casualty of the credit crunch in Australia. The business had been listed on the ASX just 8 weeks earlier at a market capitalisation of A$880m.[8]
The environment deteriorated again sharply in 2008 as the equity markets caught up with the scale of the turmoil in the structured credit markets, and started a major sell-off. Confidence in financial institutions of all types deteriorated throughout the year, and many banks struggled to fund themselves in the interbank markets, where borrowing rates rose sharply. Pressure built for financial institutions on multiple fronts, culminating in the failure of Lehman Brothers in September 2008. Governments in most developed countries implemented emergency support strategies designed to back-stop their struggling banks. In Australia, bank deposits were guaranteed[9] in October 2008 and (A$20bn) mortgage backed bond purchase programme was introduced by the government via the AOFM. Government strategies were virtually all based on supporting their various regulated banking systems however, and non-bank lenders were largely left to fend for themselves.
Most non-bank lenders radically curtailed their lending as a result, or stopped completely. La Trobe Financial continued their operations unblemished throughout this period and all investors and borrowers funding and investment redemption needs respectively were met without compromise.
Sale of Australian Operations - Strategic Partnership
On 22 December 2017, La Trobe Financial announced a strategic partnership with the sale of 80% of its operations to funds managed by Blackstone Group NYC[10]. La Trobe Financial remains 100% privately owned company, by two shareholders 80% Blackstone and 20% by interests associated with CEO Mr. Greg O'Neill.
La Trobe Financial is overseen and governed by a majority independent board of directors meeting formally each quarter to review business activities. The board have delegated specific operational authority to various committees which have carriage for setting policy for management.
Key dates and Milestones
Since 1952 operating institutional investment mandates sized between $100m to $800m each. In 1990 introduced Australia's first alternative verification loan for self employed called Lite-Doc[11]. In 2001 was appointed by the Australian Securities and Investments Commission ("ASIC") to take over another national operator.[12]
More than $22.76 billion has been successfully invested and managed on behalf of institutional and retail investors since the company commenced its operations. Institutional portfolios comprise long term wholesale mandates from all of Australia’s big four banks, most Australian regional banks, international banks and financial institutions without loss of mandated investor capital or interest since inception.
The group's Credit Fund accommodates both retail investors and select wholesale institutional investors; and operates under AFSL (222213) and the Corporations Act. The Credit Fund has over $4 billion (30 Sept 2019) of retail investments.[13]
Previous chief executives
- Kelvin David O’Mullane 1952–1972 (20 years)
- Raymond Kevin O’Neill 1972–1997 (25 years)
- Gregory Kevin O’Neill OAM 1997-current (22 years)
Previous chairman
- Mr Kelvin O'Mullane 1952–1961 (9 years)
- Mr Donald Cooper OA 1961–1972 (11 years)
- Mr Pat O'Brien 1972–1980 (8 years)
- Mr John Barton 1980–1984 (4 years)
- Mr John Dack DFC 1984–1986 (2 years)
- Mr Bertram Wilson 1986–1997 (11 years)
- Mr Raymond O'Neill 1997–2007 (10 years)
- Mr Perce Cooper 2007–2010 (3 years)
- Mr David Bird 2010–2016 (7 years)
- Mr John Marriott 2016-current (3 years)
References
- La Trobe, Financial (24 November 2015), "Austrade Free Trade Agreement (FTA)", YouTube
- La Trobe, Financial (31 October 2018), "Contact Us", La Trobe Financial Website
- Traralgon Journal Newspaper lead story (3 September 1973), "Governor opens new head office for La Trobe", Traralgon Journal and Record
- ASIC (11 February 2011), "Australian Credit Licence", ASIC
- ASIC (28 October 2016), "Australian Financial Services Licence", ASIC
- Turner, David; Groves, Les (12 January 1994), "Housing Industry Announces new Display Village Financier for two years", Joint Press Release
- Derkley, Karin (30 April 1995), "Loan saga shakes loyalties", The Sunday Age
- Schwab, Adam (11 August 2018), "RAMS board pulled by Kinghorn on loan repayment", Crikey News
- ASIC (11 August 2018), "Australian Government guaranteed deposits seal", ASIC
- Kendell, Sarah (19 December 2017), "Blackstone buys La Trobe stake", Financial Observer
- Chandler, Mathew (11 October 1998), "Loans harder for self-employed", The Australian Financial Review
- ASIC (17 May 2001), "ASIC obtains court orders appointing temporary responsible entity to mortgage scheme", ASIC
- La Trobe Credit Fund Manager Accounts (30 June 2018), "La Trobe Financial Annual Report", La Trobe Financial Website