A banking analyst does not see any problem in New Zealand matching Australia by ending a government guarantee on wholesale funds.Australia is axing its guarantee for large deposits and wholesale funding on March 31 but its guarantee for depositors with sa
A banking analyst does not see any problem in New Zealand matching Australia by ending a government guarantee on wholesale funds.
Australia is axing its guarantee for large deposits and wholesale funding on March 31 but its guarantee for depositors with savings accounts under $1 million will remain in place until next year, when it will be reviewed.
The removal of the wholesale guarantee, which helps banks raise funds in international financial markets, is seen as another sign that an economic recovery is under way.
A spokesman for Finance Minister Bill English told NZPA the New Zealand Government was considering withdrawing the wholesale guarantee facility and a decision could be a matter of weeks.
Director of Massey University's Centre for Banking Studies, David Tripe, expects New Zealand to follow.
"I don't think it matters nearly as much as it did 18 months or 16 months ago. It is no longer incredibly important," Dr Tripe said.
"The banks can issue without guarantees now and they are doing so at least to some extent," he said.
The Australian facility was established in November 2008 when the liquidity crisis hit the financial markets and it was envisaged then it was a temporary measure.
"I would not be at all surprised to see the wholesale guarantee disappear and I'd be surprised if it made much difference," said Dr Tripe.
The US, Canada, France and South Korea have already withdrawn their bank guarantees, and Britain, Sweden, Germany, Spain, Ireland and Denmark are expected to follow later this year, Australian media reported.
The New Zealand Government announced on August 25, 2009 that it will extend the Crown retail deposit guarantee scheme to December 31, 2011 and change some of its terms and conditions. The current scheme ends on October 12.
One of the changes is that banks can offer non-guaranteed deposits.
Larger banks were critical of the initial deposit guarantee scheme, believing the cost of it fell heavily them.
New Zealand's four largest banks, holding more than 90 percent of deposits, are owned by Australian banks.
