July 15, 2009

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Hi

In the news over the past week has been two of the more prominent finance companies; Strategic and South Canterbury. One is working through a moratorium and the other is facing growing difficulties.

With SCF being put on CreditWatch negative by S&P all eyes are watching to see whether it can fend off "junk bond" status.

Meanwhile the Reserve Bank has released the first of several documents aimed at introducing prudential regulation to the non-bank deposit taking sector. This includes efforts to bolster the robustness of risk management. Horse and bolted may spring to mind, but a worthy step nonetheless.

And it seems no newsletter is complete these days without mentioning the ING frozen funds story. The link here takes you to a Blog and comments politicians and their reaction to the latest developments.


News
Strategic Finance loss widens
Strategic Finance, which has a moratorium on payments to investors, said its loss widened in the 12 months through June as property values fell, more borrowers defaulted and prior-ranking lenders took action to recover loans over properties subject to SFL mortgages. More

RBNZ releases tougher rules for non-bank sector
The Reserve Bank's risk management guidelines for non-bank deposit takers (NBDT) will boost the requirements of boards to monitor their operations, after the central bank released the first of several documents to introduce prudential regulation in the sector. More

SCF related-party lending faces severe prune under draft rules
South Canterbury Finance (SCF), the finance group whose investment-grade credit rating is being supported by its biggest shareholder, would face a severe pruning of related-party lending under the central bank's draft rules for non-bank deposit takers. More

Rates Round up
BNZ boosts 18-month deposit rates, cuts one-year terms; Fonterra slashes perpetual bond returns in response to record low OCR; RBNZ says competition pushes deposit rates up. More