Local banks must survive absent parent, says Kiwi central bank
(New Zealand) Reserve Bank of New Zealand will only rubber stamp the sale of National Bank of New Zealand (NBNZ) to a foreign owner if it is convinced the bank could continue as a going concern if the parent company collapsed.
Writing in a national paper last week, Reserve Bank governor Alan Bollard said the central bank was examining ways of ensuring a bank whose parent had collapsed could continue to operate locally without requiring a taxpayer-funded, government bail out.
He suggested one option could be "haircutting" creditors’ claims on a collapsed service provider to keep it alive until a rescue package was put together.
"This would also help to put it beyond doubt that the Reserve Bank is serious about not providing any form of bank guarantee," he wrote.
"We are continuing to actively investigate the practicability of such a procedure, although other options have not been precluded."
He voiced concerns that New Zealand creditors could find themselves behind Australian ones in the event of a bank collapsing given that Australians owned the kiwi banking system.
To avoid such a situation, the Reserve Bank has been discussing plans for a "more integrated trans-Tasman approach to bank supervision and crisis management" with Australian banking officials.
ANZ is still in pole position to snap up NBNZ.
He suggested one option could be "haircutting" creditors’ claims on a collapsed service provider to keep it alive until a rescue package was put together.
"This would also help to put it beyond doubt that the Reserve Bank is serious about not providing any form of bank guarantee," he wrote.
"We are continuing to actively investigate the practicability of such a procedure, although other options have not been precluded."
He voiced concerns that New Zealand creditors could find themselves behind Australian ones in the event of a bank collapsing given that Australians owned the kiwi banking system.
To avoid such a situation, the Reserve Bank has been discussing plans for a "more integrated trans-Tasman approach to bank supervision and crisis management" with Australian banking officials.
ANZ is still in pole position to snap up NBNZ.
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