State Officials Take Control of Universal S
In a precedent-setting action, state officials Tuesday seized control of Universal Savings Bank, based in Orange, to prevent its debt-laden Australian owners from diverting funds overseas.
William Crawford, commissioner of the California Department of Savings and Loan, appointed William Davis, his chief deputy commissioner, to serve as conservator of the savings and loan firm while the state investigates a potential cash diversion.
Crawford said the move was based on confidential information provided to the department by employees of the company, which has $308 million in assets. The employees, Crawford said, had expressed concern that Unity Corp. Ltd. of Sydney, Australia, which bought Universal in December, 1986, had diverted funds or intended to divert funds from the savings bank to help reduce its own substantial debt.
Major Restructuring
Unity, a diversified company with interests in real estate and financial services, recently initiated a major restructuring program to help pay off $325 million in debt incurred in connection with its unsuccessful takeover bid for Humes Ltd., a Melbourne, Australia-based building products manufacturer.
Crawford said this is the first time the state has seized control of an apparently healthy savings and loan. He described the action as “preventive medicine” to ensure that Universal’s financial integrity is not jeopardized by the financial problems of its owners.
Contacted in Sydney, Unity’s group investment manager, Dennis Vickery, said he was not aware of the state’s action. “I’m surprised by the allegations and believe they are totally unfounded,” Vickery said. “It’s preposterous.”
Universal is the only California savings and loan institution owned by foreign interests, Crawford said, and state officials have little information about Unity and its financial problems.
Davis assumed control of Universal’s operations Tuesday at 8:30 a.m. One of his first actions as conservator was to temporarily relieve Universal Chairman Chris Blaxland of his duties.
Davis said Universal President Serge Woodruff “has our confidence” and will remain on the job.
