There was recently a post which said "deposits preferably in Kiwibank which is our only 100% safe bank at the moment".
The only "safe" place to deposit money is Kiwibonds. Both the capital and the interest payments are unconditionally guaranteed by the NZ Government. Because the Govt doesn't need any money, they're not advertised, but I see small ads are appearing in papers reminding people about them.
The next level of security is registered banks. For bondholders and depositors, these carry the least risk (note "least risk", not safe, or no risk) The banks are under the prudential supervision of the Reserve Bank - this means very strict rules about liquidity. Only these banks can call themselves banks. Kiwibank is one of those banks, but carries no extra security just because it's essentially owned by the NZ Govt. For instance Rabobank is on the face of it more secure than Kiwibank because it's owner is (as I understand it) a financially larger entity than the NZ Govt. It's extremely unlikely that the Reserve Bank/Govt would allow a registered bank to cease interest payments on deposits without stepping in to help. But there's no guarantee of that.
The next level of security is the likes of building societies (the Reserve Bank/Securities Commission insist on them describing themselves as "not a registered bank" if they have bank in their name).
The next level of security are bonds etc which have investment grade (BBB- or above) ratings. Then finance companies with investment grade ratings. There are only three of these - UDC, Marac, South Canterbury. The rest of fin cos are complete rubbish and you should get your money out while you can.
Pip, pip!
"When people are greedy, be fearful. When people are fearful be greedy" Warren Buffett.
The only "safe" place to deposit money is Kiwibonds. Both the capital and the interest payments are unconditionally guaranteed by the NZ Government. Because the Govt doesn't need any money, they're not advertised, but I see small ads are appearing in papers reminding people about them.
The next level of security is registered banks. For bondholders and depositors, these carry the least risk (note "least risk", not safe, or no risk) The banks are under the prudential supervision of the Reserve Bank - this means very strict rules about liquidity. Only these banks can call themselves banks. Kiwibank is one of those banks, but carries no extra security just because it's essentially owned by the NZ Govt. For instance Rabobank is on the face of it more secure than Kiwibank because it's owner is (as I understand it) a financially larger entity than the NZ Govt. It's extremely unlikely that the Reserve Bank/Govt would allow a registered bank to cease interest payments on deposits without stepping in to help. But there's no guarantee of that.
The next level of security is the likes of building societies (the Reserve Bank/Securities Commission insist on them describing themselves as "not a registered bank" if they have bank in their name).
The next level of security are bonds etc which have investment grade (BBB- or above) ratings. Then finance companies with investment grade ratings. There are only three of these - UDC, Marac, South Canterbury. The rest of fin cos are complete rubbish and you should get your money out while you can.
Pip, pip!
"When people are greedy, be fearful. When people are fearful be greedy" Warren Buffett.
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