The magnitude 7.1 earthquake in Christchurch on Saturday will not rock banks in New Zealand as their exposure to the city is on average around 10%, said Moody's Investors Service.The credit rating company said that the damage costs resulting from the eart
The magnitude 7.1 earthquake in Christchurch on Saturday will not rock banks in New Zealand as their exposure to the city is on average around 10%, said Moody's Investors Service.
The credit rating company said that the damage costs resulting from the earthquake would have only limited negative implications for insurers and banks in New Zealand.
"Due to very conservative reinsurance arrangements, the expected losses retained by general insurers will be minimal," said Moody's analyst Wing Chew.
The bulk of the losses will be covered by the Earthquake Commission natural disaster fund, which has been in existence for over 60 years.
On average 10% of banks' loan portfolios were in Christchurch.
"In this respect, the immediate impact will be a rise in delinquency rates due to disruptions to business and as some individual borrowers face unemployment, or are forced to take unpaid leave," said Moody's analyst Marina Ip.
