ANZ's UDC appoints two independent directors, retains RBNZ exemption from related party exposure rules

ANZ's UDC appoints two independent directors, retains RBNZ exemption from related party exposure rules

By Gareth Vaughan

The ANZ-owned UDC Finance has appointed two independent directors and set an 8% minimum capital ratio to bring itself into line with the Reserve Bank's non-bank deposit taker (NBDT) regulations.

However, the central bank will allow UDC, which is again running television advertisements saying it has "lots of money to lend," to have exposure to related parties as a percentage of its capital of up to 75%, instead of the 15% limit prescribed by the NBDT rules, until December 1, 2015.

The independent directors appointed as of this month are Stuart  McLauchlan, a Dunedin accountant who was appointed a South Canterbury Finance independent director in October 2009 )Companies Office records still list him as one), and the Brisbane-based Paul Norris. McLauchlan has replaced ANZ's commercial and agricultural head Graham Turley as UDC's chairman although Turley remains on the finance company's board.

McLauchlan is also a director of Dunedin City Holdings, Aurora Energy, Scott Technology, Dunedin Casinos and Dunedin International Airport.

UDC, a lender of asset finance for plant, equipment and vehicles, was granted an exemption by the Reserve Bank from last December, when the relevant NBDT regulations were introduced, until June from having any independent directors, as well as from the capital ratio and related party exposure criteria.

UDC's full board is now Turley, ANZ's head of commercial finance Bruce Anderson, ANZ's chief credit officer Richard Wilks, Penelope Ford, head of ANZ's foreign exchange sales in Auckland, plus McLauchlan and Norris.

The NBDT regulations set out that a minimum capital ratio must be included in NBDTs' trust deeds. This must be at least 8% for those with a credit rating from an approved credit rating agency, and at least 10% for those lacking a credit rating. UDC has an AA credit rating from Standard & Poor's and has inserted an 8% minimum capital ratio into its Trust Deed. The company's trustee is Trustees Executors.

On the related party exemption, UDC can use ANZ's Reserve Bank approved capital calculation model rather than the NBDT prescribed calculation model to calculate the risk-weighted amount for credit risk.

UDC has an on-demand loan facility from ANZ of NZ$800 million. As of September 30 last year, UDC had drawn down NZ$450 million. ANZ's March quarter General Disclosure Statement showed NZ$1.584 billion of secured debenture stock as of March 31.

This article was first published in our email for paid subscribers this morning. See here for more details and to subscribe.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.