New Zealand

[iam802]

GE Money pulling the pin on NZ market
http://www.nzherald.co.nz/business/news ... d=10539331

GE Money is withdrawing from the home loan, car finance and small business market in New Zealand.

The finance company is stopping new mortgage lending and lending on vehicles and will lay off 80 staff, TV3 reported. Existing customers will continue to be serviced.

The company will cease offering home loans through third parties such as brokers and end its motor finance and small business finance in Australia and New Zealand, The Age newspaper reported on its website.

The company has 500 staff in New Zealand, according to its website. GE Money was first established in New Zealand in 1982.

The move is a response to the global financial market meltdown, which has increased funding costs for financial institutions.

GE Money is downsizing its business in both Australia and New Zealand and 335 staff are expected to be axed, The Age reported.

Victoria, where GE Money has its head office, will bear the brunt of the lay-offs.

"This is a result of the extreme volatility and greatly increasing cost of funds on the global and local wholesale markets," GE Money said.

The measures will have no effect on its retail store finance, credit cards, personal loans and insurance businesses.

"This was a very difficult decision to take. However, we will now be able to better focus on those parts of the business that are our core strengths and in which we have scale," GE Money's Australia and New Zealand chief executive, Mike Cutter said.

GE's Australian motor finance business is one of the biggest in the country, with Holden, Ford, Toyota, Mazda and Audi among the many brands financed.

GE Money is part of giant GE, which reported earnings of US$4.5 ($7.84) billion in the third quarter. It is in the non-bank sector, which has been struggling.

- NZPA

[kennynah]

i remember there were very aggressive in their GE Money scheme... although i personally dont know anyone who has taken up their loans...

[iam802]

I just saw another news on GE Money at an Australia news site.

They are downsizing there as well.

Not too sure if SG falls under the same regional head.

[iam802]

RB accepts $8.7bn ANZ and Westpac loans

http://www.nzherald.co.nz/business/news ... d=10539469

The Reserve Bank has approved the purchase of billions of dollars worth of residential mortgage-backed securities from two major banks as security should they run short of money.

The central bank has agreed to accept $8.7 billion of housing loans from the ANZ National and Westpac banks as security.

The banks are the first to take up the Reserve Bank's offer to provide extra liquidity during the global financial crisis, Radio New Zealand reported.

Westpac said it has not drawn on the facility yet but might if market conditions remained difficult.

Banking analyst David Tripe said other banks including ASB and BNZ were working on a similar arrangement

[kennynah]

nzd FCD better run road fast.....

[iam802]

US Fed to lend NZ Reserve Bank $US15 billion

http://www.nzherald.co.nz/business/news ... d=10539933

WASHINGTON - The Federal Reserve says it will supply New Zealand's Reserve Bank with up to $US15 billion, as part of its ongoing effort to break through a global credit clog.

Under the new "swap" arrangement, the US central bank will provide US dollars to the Reserve Bank of New Zealand in exchange for New Zealand currency.

"This facility, like those already established with other central banks, is designed to help improve liquidity conditions in global financial markets," the Fed explained in a brief statement.

The goal is to spur banks and other financial institutions to lend more freely, something that will help the US and global economies.

The Fed has set up similar arrangements with the European Central Bank and with central banks in other countries, including Australia, Canada, and Japan

[millionairemind]

New Zealand Jobless Rate Rises to Five-Year-High 4.2% (Update2)

By Tracy Withers

Nov. 6 (Bloomberg) -- New Zealand's jobless rate rose to the highest in almost five years in the third quarter, adding to signs of a prolonged recession that is prompting companies to cut production and fire workers.

The unemployment rate increased to 4.2 percent from 3.9 percent in the previous three months, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures. The median estimate of 12 economists surveyed by Bloomberg News was for 4.3 percent.

Rising unemployment will curb consumer spending and adds to signs New Zealand will post its worst gross domestic product result in 10 years. Reserve Bank Governor Alan Bollard has lowered the benchmark interest rate by 1.75 percentage points since July and will probably cut by at least another half point in December to bolster confidence and demand, economists say.

[iam802]

BNZ gets ratings upgrade

http://www.nzherald.co.nz/business/news ... d=10542382

One of New Zealand's largest banks has received a shot in the arm from international credit rating agency Standard & Poor's.

S&P has upgraded its outlook for BNZ's AA credit ratings from 'negative' to 'stable' after its parent National Australia Bank yesterday raised a bigger than expected A$3 billion in new capital.

The funds were raised through a share placement to institutional investors.

This increases the pressure on ANZ and Westpac, who are expected to raise A$1 billion each later this week through share issues, possibly to back dividend reinvestment plans.

"The outlook revision reflects our view that the risk of a ratings downgrade on NAB in the medium term has been lessened by the bank's ordinary-equity capital raising of more than A$2 billion, which has been fully underwritten," said Standard & Poor's credit analyst Sharad Jain.

"We anticipate that similar to its domestic peers, NAB's earnings are likely to remain under pressure in the near term due to potentially higher credit and asset provisioning, and pressures on asset growth. However, credit losses stemming from mortgage and consumer loans are expected to remain manageable within the 'AA' rating level."

This boosts NAB's tier one capital ratio to over 8 per cent from 7.35 per cent at September 30.


(802: I think some of our local banks have better ratios)

"Although fiscal 2008 cash earnings are 10.7 per cent below the previous year's, the bank's profitability remains strong and supportive of the group's credit profile. Despite the continuing global financial-market dislocation, we consider that NAB's funding and liquidity are supported by the measures announced by the governments and central banks in Australia, New Zealand, and the U.K. in the recent weeks," S&P said.

"If the dislocation in global financial markets prolongs and worsens, similar to NAB's peers, the bank's credit profile could be negatively affected in four broad areas:

* Reduced access to funding and capital. This risk is accentuated by the Australian major banks' dependence on offshore wholesale funding to make up the gap between loans and customer deposits;

* Increased credit losses from exposures to financial counterparties, although the current indications are that these exposures are currently small and being reduced;

* Increased credit losses through increased corporate and retail defaults; particularly because the outlook on the Australian economy is weakening, and there is more downside risk than upside potential. Although NAB's credit losses in the U.K. have remained manageable, and are lower than peers, we note that the U.K. housing market is experiencing more severe stress than Australia;

* Changes in risk appetite and business models due to potential earnings impact, M&A opportunities, or changes in the financial market environment."

[kennynah]

i wonder if any of these rating agencies' remarks are now seriously taken, after many of them were accused of not reflecting the correct ratings of companies whose stock prices started tumbling...

[iam802]

BNZ goes below 7 per cent mortgage barrier

http://www.nzherald.co.nz/business/news ... d=10544787

BNZ is throwing down the gauntlet to other banks in slashing its lowest mortgage rate today to below 7 per cent.

The 'mortgage rates war' was a key battleground four years ago when BNZ and ASB went at it hammer and tongs in the spring of 2004.

That tussle over 2 year fixed rates gave the housing market a second wind that did not run out until the end of 2007 and hamstrung the Reserve Bank's efforts to slow the economy.

The difference this time is that the battle is around the variable and 6 month rates and could restore some the Reserve Bank's monetary policy powers and lift the economy as it heads towards a difficult 2009.

BNZ has announced a new 6.99 per cent 6 month mortgage rate that makes it the lowest in the market, beating even Kiwibank's lowest rate of 7.29 per cent for one year and Westpac's lowest rate of 7.19 per cent for 18 months. ANZ and National's lowest rate is 7.3 per cent for one year, while ASB's lowest rate is 7.35 per cent for 6 months.

BNZ's new one year rate is 7.29 per cent, down from 8.29 per cent, while its 2 year rate is 7.35 per cent, down from 8.29 per cent.

This latest competitive first strike ahead of an expected 100 basis point cut in the Official Cash Rate next Thursday to 5.5 per cent has increased the competitive intensity that is likely to drag many 2 and 3 year fixed rate borrowers down towards a 6 month or variable rate as interest rates drop quickly. Most economists see the OCR falling as low as 4 per cent next year, meaning the variable and short term mortgage rates are likely to drop to 6-7 per cent.

Some economists, including Goldman Sachs and Deutsche Bank, are now forecasting a 150 bps cut on December 4.