NZ non-bank lenders opt out
(10 March 2010 – New Zealand) Tough changes to liquidity rules and regulations for non-bank lenders have proved to be a challenge, with some opting to exit the New Zealand market.
By the 1st March 2010 non-bank lenders with liabilities of more than NZ$20 million (A$15.4 million) had to gain a rating to continue raising money from the public; new capital adequacy requirements were also being put in place for the deadline, reported the New Zealand Herald.
Two New Zealand lenders, Citywide Capital and Farmers Mutual Finance, have decided to pull out of the public raising.
Tony Phillips, managing director of Citywide Capital, an Auckland property lender, said the new rating regime had made it too tough for his small company to continue.
Citywide is only a small company and would never be able to meet the criteria, yet is one of the successful companies that have got through the recession, Mr Phillips added.
As a result of the new rating requirements Citywide Capital, which until recently had been offering 10 percent per annum to debenture investors, has pulled its prospectus and will now be focusing on targeting habitual investors, which do not require a prospectus under the Securities Act, the New Zealand Herald reported.
Mr Phillips added that the company had paid back all money owned to debenture investors.
The New Zealand Herald also reported that Farmers’ Mutual Finance, previously covered under the government guarantee, has announced that it also will not be raising money from the public to gain the new ratings.
Owen Wallace, general manager of operations, Farmers’ Mutual said that the changes had been a driver in its decision to cease taking money from the public in February last year.
Mr Wallace added that it had not applied for a rating because it had no intention of re-entering the debenture market; Farmers’ Mutual decided being a finance company didn't fit its strategy and the company wanted to focus on the insurance side of the business.
Two New Zealand lenders, Citywide Capital and Farmers Mutual Finance, have decided to pull out of the public raising.
Tony Phillips, managing director of Citywide Capital, an Auckland property lender, said the new rating regime had made it too tough for his small company to continue.
Citywide is only a small company and would never be able to meet the criteria, yet is one of the successful companies that have got through the recession, Mr Phillips added.
As a result of the new rating requirements Citywide Capital, which until recently had been offering 10 percent per annum to debenture investors, has pulled its prospectus and will now be focusing on targeting habitual investors, which do not require a prospectus under the Securities Act, the New Zealand Herald reported.
Mr Phillips added that the company had paid back all money owned to debenture investors.
The New Zealand Herald also reported that Farmers’ Mutual Finance, previously covered under the government guarantee, has announced that it also will not be raising money from the public to gain the new ratings.
Owen Wallace, general manager of operations, Farmers’ Mutual said that the changes had been a driver in its decision to cease taking money from the public in February last year.
Mr Wallace added that it had not applied for a rating because it had no intention of re-entering the debenture market; Farmers’ Mutual decided being a finance company didn't fit its strategy and the company wanted to focus on the insurance side of the business.
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