Pyramid Building Society

Former Australian building society

The Pyramid Building Society, the Geelong Building Society and the Countrywide Building Society together made up the Farrow Group of building societies, based in Geelong, Australia. The group collapsed in 1990 with debts in excess of $2 billion. The cost of the collapse to Victoria taxpayers was estimated at over $900 million. A fuel levy of 3c per litre was introduced by the Victorian Government to recompense depositors.

Pyramid was established in Geelong in 1959 by Vautin Andrews and Bob Farrow. Andrews was later mayor of Geelong, and Farrow was an accountant whose firm managed the society. When legislation changed in the mid 1960s to allow building societies to take deposits from the public, Pyramid grew rapidly. Bob Farrow's health suffered in the late 1970s and his son Bill Farrow took over much of the operation, and Andrews' son Bruce Andrews also worked for the society. Pyramid took over its competitor, the Geelong Building Society, in 1971. That society had origins going back to 1867 and had been operated very conservatively. In 1983, the rules for the Pyramid and Geelong building societies were changed to allow shares, representing ownership of the societies, to be issued. The Farrow Group, controlled by the Farrow family, asserted that, as managers, they should receive most of them. After the collapse of the Farrow Group, the basis for this assertion was disputed, but Farrow ended up as owner of a substantial business for a very modest outlay of money. In 1984, the Farrow Group also took over the small Third Extended Starr Bowkett Building Society and renamed it the Countrywide Building Society. At the time of the group's collapse, it was headed by Bill Farrow and former Geelong Football Club player David Clarke.

In early 1990, a run on Pyramid began. The reason for that was never established, though it was suspected some rumours might have been started by rival institutions. On 13 February 1990, the state treasurer Rob Jolly and attorney general Andrew McCutcheon held a press conference and assured the public that Pyramid was sound. In fact, Pyramid was not sound, but its rapid expansion had taken Pyramid well beyond the regulatory capabilities of the Registrar of Building Societies in Victoria. After the run, Pyramid mounted an advertising campaign to attract more deposits, offering markedly higher interest rates than competitors. Behind the scenes it was borrowing money, selling assets, and trying to find a merger partner. The group's value was in the branch network and strong customer loyalty, but the question was how many bad loans it was carrying. A second run of withdrawals began in May 1990. The Cain Government tried unsuccessfully to negotiate the sale of the Pyramid Group to one of the Big Four banks, believed to have been Australia and New Zealand Banking Group.

In 2003, the Department of Foreign Affairs and Trade awarded a grant of $90,000 to Geelong based company, World Wide Entertainment, headed by former Farrow Group head, Bill Farrow. On 23 March 2008, Warren Meyer, a former bankrupt who owed $2.3M to the Pyramid Building Society, went missing on a bushwalk, although it was believed that he might have been killed by deer hunters. Another business venture headed by Bill Farrow, a media company named Switch, collapsed in February 2015, owing over $0.5M, due to "poor financial control including a lack of records and trading losses".