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RBNZ expects more finance company closures
The Reserve Bank has warned in its 6 monthly Financial Stability Report that it expects further rationalization and closures in the non bank deposit-taking sector it now regulates, which includes finance companies, building societies and credit unions.
RBNZ Deputy Governor Grant Spencer said many non-banks remained under pressure as they sought to repair damage to balance sheets from the recession.
"The non-bank sector is now also faced with the challenge over the coming year of meeting the requirements of the Reserve Bank's new non-bank prudential regime. In meeting these challenges, we fully expect to see further rationalization and closures," Spencer said.
6 Comments
This is hardly news, it
This is hardly news, it is more like stating the obvious. The government provisioned $800m on the basis, apparently, that 30% of the finance company sector would go under. As I have argued elsewhere, it appears that South Canterbury Finance could use up most of that.
May not be news, but
May not be news, but every finance company failure is another reason not to put savings into finance companies, which makes a ever decreasing downward spiral.
Since the finance companies seem to be the only ones interested in lending to business, confirmed by Bollards plea to banks to lend more to business, it is the very source of the economic recovery that is being stiffled by the inability of business to obtain funding.
Free up business lending and things will get a whole lot better a whole lot faster.
No keith....the cost of finance
No keith....the cost of finance must rise to reflect the 'true' risks involved in lending into this ponzi economy. Most of the mess has been caused by credit being too cheap for too long. Think about it.
What’s that sound? A ponzified
What's that sound?
A ponzified house of cards collapsing.
And the sound before that?
Silence - as the foundations for it were laid.
Keep up the great work RBNZ your'e doing a wonderful - NOT.
Keith, actually every financial institution
Keith, actually every financial institution failure or cutback in lending increases the market price, and risk-adjusted return on lending. The stronger ones that remain, although they have to pay a risk premium to get funding, still can make more profits after that. It is called the credit cycle. It means that the financial system is not unstable and will mend if not hampered by government intervention.
@ Jacko - and how
@ Jacko - and how is this the RBNZ's fault ?