Bernard Hickey details the key news over the weekend in 90 seconds at 9 am in association with Bank of New Zealand, including news from Europe of growing concerns that contagion is spreading from the Greek sovereign debt crisis to southern Europe's banks.
Moody's put 16 mid-sized Italian banks on outlook for downgrade late last week, sparking a sharp sell-off in Italian banking stocks. There are worries that European banks holding Greek sovereign and bank debt may be forced to take heavy losses if Greece defaults. See more here at Bloomberg.
The Euro fell and the New Zealand dollar was weak at just over 81 USc as investors took 'risk' off the table on fears about what a European financial crisis could do to financial markets and global growth. Some fear a Greek default could trigger a "Lehman style" financial crisis that makes it much more difficult and expensive to refinance debt.
New Zealand's banks owe more than 40% of GDP to foreign creditors on terms of less than 90 days, which the IMF and others have warned is a vulnerability if global credit markets freeze again as they did during the Lehman Brothers crisis.
Also, the Bank for International Settlements has said central banks need to hike interest rates to contain inflation. See more here at Bloomberg.
Meanwhile, New Zealand's Local Government insurer Civic Assurance will not be covered from Friday because it has been unable to find reinsurance, NZ Herald reported.
There are also rumblings between contractors and the EQC. Stuff reported the Amalgamated Workers Union plans legal action to claim back NZ$3 million in unpaid bills to contractors.
Also, disgruntled home owners are looking at taking legal action against insurers because they are not being paid enough to replace damaged houses. There are also concerns that those receiving payouts from the red zone in Christchurch may not receive enough to buy expensive sections to rebuild, Stuff reported.
Elsewhere, Standard and Poor's said reinsurance rates were likely to triple, Stuff reported.
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