Funding for banks easier than September, but still tight, RBNZ says

The Reserve Bank has reported that funding conditions for New Zealand banks in offshore markets improved since the last Financial Stability report in November, but they had not returned to normality and banks still needed to lengthen the maturity of their funding. The US Federal Reserve's intervention in US Commercial Paper market had made it easier for New Zealand banks to issue into that market and had helped reduce New Zealand banks' reliance on this market. New Zealand bank funding from this market had reduced by a third or NZ$8 billion since November and had fallen 50% in US dollar terms. However, the banks still had more than 40% of their international funding maturing in less than 90 days, the Reserve Bank said. "Reducing dependence on short term wholesale funding is a key objective of the Reserve Bank's proposed new prudential liquidity policy," the bank said. The new policy will be released around the end of May, it said.