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BNZ First To Be Approved Under NZ Wholesale Funding Guarantee

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Dec 22 NZPA - Bank of New Zealand has become the first bank to be approved under the Crown's wholesale funding guarantee facility.

The facility is designed to support the re-entry of New Zealand banks to foreign markets. The separate retail deposit guarantee scheme now has a long list of accepted institutions.

"BNZ is pleased to be the first bank to be approved under the Crown wholesale funding guarantee facility," said BNZ's treasurer Neil Bradley.

The guarantee facility gave the bank the capability to issue wholesale debt with a Crown guarantee should it wish to. It would decide whether or not to on a case-by-case basis, depending on market conditions.

The facility is available to financial institutions that have an investment grade credit rating and have substantial New Zealand borrowing and lending operations. Banks pay fees to be part of the facility, which is run on an opt-in basis.

Industry observers have said the wholesale guarantee scheme is arguably more important than the retail deposit guarantee scheme as New Zealand banks compete in international markets with other countries that now have wholesale deposit guarantee schemes. The scheme was expected to provide income to the Government from fees charged.

The international markets where banks raise some of their money seized up during the global financial crisis but New Zealand banks have argued that they are relatively well placed because they have high credit ratings.

BNZ is owned by National Australia Bank.

NZPA WGT pjg

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