28 May 2012

Lending competition benefits NZ companies

7:36 am on 28 May 2012

New Zealand companies are benefiting from increased competition in the business lending market, as international lenders seek to increase their exposure in this country.

Foreign-based banks such as Citibank, HSBC and Bank of Tokyo-Mitsubishi mostly operate in the wholesale corporate market, lending to companies or clients doing business, without having a retail presence in this country.

The Reserve Bank notes in its latest Financial Stability Report that business lending by offshore branches of non-Australian banks has picked up in the last six months, which is increasing competition in the local market.

PWC partner Paul Skillender says New Zealand is increasingly seen as a good place to do business, and banks, particularly Asian ones, are simply following their clients here.

"We're seeing more of those banks participating in banking syndicates which is where a group of banks get together to lend to a corporate, typically for a larger type of lending facility," he says.

Mr Skillender says some of the banks participating in syndicates are also increasing their share of the overall syndicate's lending activity to a corporate.

But it's not only foreign banks that are benefiting, Mr Skillender says, as New Zealand banks are also branching out overseas.

He says a number of Australasian banks, such as ANZ, are aggressively pursuing growth strategies in the Asian region.

Mr Skillender says there are now genuine options for New Zealand corporates looking to expand into Asia to continue to be serviced and borrow from a local bank, but operate in a foreign market.