RBNZ grants exemptions to finance companies
The Reserve Bank of New Zealand granted three key exemptions to UDC Finance from the new regulations applicable to non-bank deposit takers that came in to effect on December 1.
Monday, December 6th 2010, 5:00AM
by Sophia Rodrigues
UDC Finance is exempted from meeting requirements under the capital ratio, related party and governance requirements until May 31, 2011. Such exemptions are further carried until December 1 2015 but they are subject to UDC Finance meeting alternative capital and related-party exposure requirements by June 1, 2011.
UDC Finance's related party exposures are mainly with parent ANZ National Bank as the finance unit deploys cash and short term funds with the bank. It also has smaller liabilities with other members of the ANZ group.
The new regulations include requirements on minimum capital ratio, restrictions on related party exposures and the existing credit rating norms. Other requirements relate to liquidity norms which state that the Trust deed must state the liquidity requirements. There are also governance requirements to be met that pertain to the presence of at least two independent directors in case of companies or building societies.
Fisher & Paykel is another major finance company to have been granted an exemption but that's confined to governance requirement. The exemption doesn't have an end date but is subject to the condition that Fisher & Paykel Finance maintains alternative governance arrangements.
Client Reserve which already has an exemption from obtaining a credit rating is further exempted from complying with the minimum capital ratio, related party exposures, liquidity and governance requirements. Such relief is applicable until June 30, 2011 and has been granted because Client Reserve has undertaken to wind down its debt security products by this date. Client Reserve is an unit of AXA.
Craigs Investment Partners Cash Management Trust and Forsyth Barr Cash Management also have similar exemptions as they have undertaken to wind down their debt security portfolio. In case of Craigs the relief expires at the end of the month while for Forsyth Barr the exemption ends on June 30, 2011.
Public Trust has a partial exemption from liquidity, minimum capital and other requirements but must meet alternative capital requirements. In case of Public Trust the related party exposure to the Crown is not counted under such exposures.
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