Origins
AGC was founded in 1925 and listed on the stock exchange in 1928. Its business began with lending for cars and farm machinery and later expanded into personal loans, loans for non-farm business equipment (the type structured as leases), and hire purchase. Most of the funding for AGC's loans came from issuing debentures to the public, offering attractive interest rates.
In 1957 the Bank of New South Wales (later called the Wales, the forerunner of today's Westpac) bought 40% of AGC and over the years progressively increased its interest to a majority stake. Banking regulations at the time prevented banks from doing the sort of lending finance companies like AGC did, but buying a finance company let the banks get around that. All the major Australian banks ended up with finance company subidiaries doing riskier lending than the banks themselves would. The Wales let AGC run as an independent business, and that included giving no guarantees on the debentures issued by AGC.
Read more about this topic: Australian Guarantee Corporation
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