Financial Armageddon!!

[speights boy]

So, it be equally fair, if a bank wants to get deposits from the general public, the Directors of the Bank should also have to sign an unlimited personal guarantee on the debts of the Bank.
No guarantee, no deposits.

Seems fair to me.

I agree.

No guarantee, no deposits.
No deposits, no mortgages.
No mortgages, house price crash.
Pay cash for house instead of loaning it to the bank.

Bring it on.

(Also do wonders for our current account deficit as we won't be sending all those mortgage interest payments off shore)

[Wayne]

So, it be equally fair, if a bank wants to get deposits from the general public, the Directors of the Bank should also have to sign an unlimited personal guarantee on the debts of the Bank.
No guarantee, no deposits.

Seems fair to me.

You certainly have that option - just the same as the bank when they lend to you.

[Perry]

Why don't they just type an extra zero on the banks account balance?

. . . banks account balance with what/whom?

[Perry]

No guarantee, no deposits.
No deposits, no mortgages.
(Also do wonders for our current account deficit as we won't
be sending all those mortgage interest payments off shore)

Doesn't a large amount of NZ's mortgage
finance come from overseas, anyway?
I had the idea very little was derived
from NZ sources. Has that changed?

[speights boy]

^ CFR
Core Funding Ratio.

My basic understanding is increasing the amount of funding from more stable retail and domestic sources as opposed to more volatile offshore funding.
This follows the 08 Lehman liquidity crises.

NZ banks already well ahead of the higher core funding ratio the RBNZ will introduce next year

Introduced in April 2010 as a move designed to reduce New Zealand banks' reliance on short-term overseas borrowing, the CFR sets out that banks must secure at least 70% of their funding from either retail deposits, or wholesale sources such as bonds with durations of at least a year. The Reserve Bank lifted the CFR to 70% from 65% on July 1 last year, andplans to increase it again, to 75%, from January 1, 2013.

www.interest.co.nz/bonds/61491/nz-banks-already-well-ahead-higher-core-funding-ratio-rbnz-will-introduce-next-year

Retail investor demand helps BNZ raise NZ$350 mln in oversubscribed bond issue
www.interest.co.nz/bonds/63717/retail-investor-demand-helps-bnz-raise-nz350-mln-oversubscribed-bond-issue-offering-both

[cube]

Following the collapse of anything resembling a decent return, the banks were awash with cash, I believe, which is why the incentives are now out for new mortgages (TV from the ASB anyone?)

[speights boy]

Correct cube; but by anything I guess you mean "deposits"
Still very good returns to be had outside of deposits and residential property of course.

Back to the banks.
Slowly tightening the screw a bit perhaps, nothing to scare the horses but just try to keep a lid on things.
Only effects people who need to borrow funds from NZ banks in the first place of course.

Reserve Bank wants to increase the amount of capital banks must set aside to cover potential losses from high loan to valuation ratio home loans

The Reserve Bank says it wants to increase the amount of capital the country's big four banks must set aside to cover potential losses from high loan to valuation ratio (LVR) home loans.
Such a move would, in theory at least, make such lending more expensive for the banks.

www.interest.co.nz/property/63730/reserve-bank-wants-increase-amount-capital-banks-must-set-aside-cover-potential-losse

[Austrokiwi]

News on the radio ( In Vienna Austria this morning). They have just discovered that Cypriot banks have been leaking like a sieve over the last week or so. Although they had closed the banks and limited withdrawals from cash machines to €100.00 per day, they hadn't successfully shut down internet banking. As a result approximately a billion Euros escaped the clutch's of Cypriot banks last week, apparently most of the transfers were actioned from outside of Cyprus!

[speights boy]

And suddenly a few Cypriot bank officials and IT geeks have a few new dacha in Sochi.
Funny that.

[Austrokiwi]

And suddenly a few Cypriot bank officials and IT geeks have a few new dacha in Sochi.
Funny that.

MMM: Heres a conspiracy theory perhaps a back door was left open deliberately so that Cyprus could get the bail out and the Russians could also be allowed to save some funds.

[speights boy]

Frau Merkel will not be happy.

Funny how such a small country that 3/4 of the world's population couldn't locate on a map has suddenly become such a talking point.
Until it's Slovenia's turn next week.

"This is the biggest crisis.........until the next one"

Or, as I read elsewhere....."In my experience, the meteor always misses the planet."

[Austrokiwi]

Cyprus is really just an extension of the the Greek crisis a fair proportion of the funds deposited in Cypriot banks was invested in Greece. I nervously watch Austrian banks....they had/have all these , apparently still performing well, investment schemes with eastern Europe( Slovakia, Poland, Romania etc) Our bank adviser still needles me over our turning down the offer to participate in one of these funds. Obviously my concern then and now is the investments are high risk( despite being sold as low risk) if any of those investment funds runs into trouble it will be nasty as the lead bank is actually Italian owned!

[Perry]

Well, Austro, maybe a short-back-and-sides,
kiwi style isn't such a big risk, after all?

[speights boy]

Our bank adviser still needles me over our turning down the offer to participate in one of these funds. Obviously my concern then and now is the investments are high risk( despite being sold as low risk) if any of those investment funds runs into trouble it will be nasty as the lead bank is actually Italian owned!

Very wise of you.
A repeat of Credit Sails.
At least the Commerce Commission got $60m back for investors....they actually deserve a well done for that result.

Relief and anger from Credit Sails investors

There was relief mixed with anger from Credit Sails investors this morning as they learned one of New Zealand's largest sharebrokers and a giant French bank had agreed to pay $60 million in compensation for their losses.

"I'm obviously very pleased," said Dunedin investor Andrew Cunningham. "I'll take the money and I'll never deal with those people again."
Retired businessman Grant Waterhouse, who stands to recover more than $100,000 of a $150,000 investment, said news of the payout was reward for the heartache.

"It's just good," he said. "Despite the fact these pricks don't admit liability, the fact they've coughed up $60m has got to say something.

"And it's good they've been held to account. They would have just squirmed their way out of it if the Commerce Commission hadn't got the bit between their teeth."

www.stuff.co.nz/business/industries/8093688/Relief-and-anger-from-Credit-Sails-investors

[Austrokiwi]

I don't usually take serious notice of Fox news ( I like reading the articles because they are so funny and they can't, IMHO, be regarded as a reliable news source) however they seem to have picked up about the Leak of funds from Cypriot banks before other English Media outlets have:

http://www.foxnews.com/world/2013/03/27/russia-support-for-cyprus-seizures-deposits-may-mean-big-money-already-out/