NZ central bank scolds Rabobank
(BusinessDesk) - New Zealand's Reserve Bank sent a formal warning to the local subsidiary of Dutch agricultural lender Rabobank for briefly withdrawing its credit rating in July.
The central bank warned Rabobank New Zealand for "failing to maintain a current rating of its creditworthiness, as required under Section 80 of the (Reserve Bank) Act," according to a statement on its website. On July 11, Standard & Poor's withdrew its AA rating on a negative outlook for Rabobank NZ at the lender's request, before reinstating it a day later.
"Rabobank New Zealand Limited has acknowledged its mistake in withdrawing its credit rating, and acted promptly to remedy the situation when drawn to its attention," the central bank said. "It has committed to take remedial measures to prevent similar issues in future."
At the time of the withdrawal, Rabobank NZ told interest.co.nz the rating had been withdrawn because the group issued debt through its Rabobank Nederland NZ branch and deposits were taken through the online unit RaboDirect and guaranteed by the Dutch parent.
AA-rated Rabobank Nederland has $900 million of perpetual notes paying an annual interest rate of 3.7 percent listed on the NZX's debt market. The notes rose 0.4 percent to $79 per $100 bundle today.
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Comments and questions8
Yes a close eye should be kept on Rabobank,they are relying on the reputation of the parent Bank,rather than their autonamis performance.pleased to see them get a warning,if anything dodgey make them pay the perpetual bonds back at full value !!
And who is this "NZ Central Bank" to send anybody a warning? They should look to their own pathetic performance and leave other banks to mind their own.
The perpetual bonds are bought and sold by people with their eyes open, or their eyes should be open! Then there was those that invested in SCF, Bridgecorp, Hanover et al with this "NZ Central Bank" watching on AND DOING NOTHING!! DOH
Just a question: is/was the RBNZ responsible for keeping an eye on those finance companies, or is it limited to regulating registered banks, and was the Securities Commission or someone else supposed to be looking over the non-bank deposit takers?
No they technically were not "responsible". But they DID know (on record they reported "concerns" to Cullen) what was going on and, I believe they had a moral responsibility.
You just do not stand by and watch a crash if you can do something to reduce the damage.
Yes John youre right again. This was a 'foot fault' not an atomic bomb.
They should get their eye firmly on the implausibility of licensing Heartbreak Bank, rather than Rabo foot faults !!
The NZ central bank has a lot to answer for itself.
It's policy of low interest rates has effectively discouraged savings and encouraged borrowing.
As has been pointed out ad nauseum, without savings we will not build domestic investment capital which is essential if we wish to stop overseas funding of our deficits.
Perhaps the greater tragedy is that our politicians do not seem to be aware of this Economics 101 obvious truth but support reserve bank policies.
liberte
Where was this amazing Central Bank while Hanover, Bridgecorp, Lombard, Capital +, B'On, Belgrave and many more were thieving from people's life savings?
EPIC FAIL
This is the start of what i have suspected for some time, that the dangerous behaviour by Rabo in the past few years will catch up on them. Explains why their interest rates for farmer borrowers are already up to 2% higher than those of the main banks, average 1 higher.