9 Apr 2010

Rating agency concerned at liquidity of NZ non-bank sector

5:54 am on 9 April 2010

Standard & Poor's says liquidity remains a concern for New Zealand's non-bank financial sector.

In a report issued on Thursday, the international rating agency says the sector will continue to face challenges for a while yet, mainly due to its susceptibility to liquidity and funding risks

While the sector's problems with asset quality are showing signs of having peaked, and regulatory oversight has improved, credit analyst Peter Sikora says most players in the sector have very little, or no back-up external liquidity.

Mr Sikora says the Crown Retail Deposit Guarantee Scheme has played a critical role in averting the sector's total collapse, but non-bank deposit takers most vulnerable to liquidity and refinancing risks are not covered by the extended scheme.