Depositors ring phones off hook as accounts run dry
IT was a cold Sunday night in the depth of winter when the Geelong Addy’s phones started running hot.
Just like this week, the Cats were coming off a loss to Carlton on the Saturday.
But on June 24, 1990, no one who called the newsroom wanted to talk about Malcolm Blight’s struggling team.
They wanted to know what was happening at the shiny new Farrow Corporation building on Brougham St.
Word was spreading that Farrow’s building societies — Pyramid, Geelong and
Countrywide — were in strife.
The Pyramid group was the behemoth of Victoria’s building societies, with about 200,000 investors, 54 branches and more than 700 staff.
But its origins and heartland were firmly in Geelong.
Vautin Andrews was the city’s mayor in 1959 when he helped Bob Farrow start the Pyramid Building Society in a humble James St office.
Bob’s son Robert William McIntyre Farrow — known as Bill — was one of the early stakeholders, and started running it a dozen years later, about the time it took over the century-old Geelong BS.
As if to emphasise the Geelong credentials of his business, Bill Farrow employed Cats superstar David Clarke at the height of his glittering footy career, later making him a part-owner of the business.
Farrow and Clarke guided and grew Pyramid during the 1980s.
It moved outside mum-anddad mortgages into speculative commercial property markets, and took on the banks in the chase for depositor dollars.
“Better than a bank — watch your savings grow” was the catchy jingle to its aggressive television advertisements, which promised investors “giant interest rates” compared with the “peanuts” on offer from most of the banks.
With depositor rates climbing as high as 18.5 per cent, it was true the banks could not — and did not want to — compete with what the Pyramid lads were willing to offer.
But why would Pyramid’s customers care?
As far as they were concerned, Pyramid was “Geelong’s bank”.
They knew the tellers and branch managers, they knew — or at least knew of — the owners, and the rates were superior.
What’s more, Farrow Corp was investing in Geelong, and looked to be flying.
It celebrated Pyramid’s 30th anniversary late in 1989, boasting of spectacular growth in assets and a run of record trading results.
But the love-in came to an abrupt halt not long before
Valentine’s Day, 1990.
Some customers were nervous about Pyramid’s ability to pay out their investment and started withdrawing their cash.
It escalated into a run on Pyramid deposits, with $200 million leaving Farrow coffers within a week.
No one knew it at the time, but it was the beginning of the end for Pyramid and Farrow Corp.
The nervy investors who swamped the Addy phone lines on that Sunday four months later had stuck with the group through that time, but were about to wish they had not been so loyal.