Credit Union Baywide gets BB rating; ponders Govt guarantee
Credit Union Baywide has been granted a strong enough credit rating to apply for the government's extension to the retail deposit guarantee, but has yet to make a final decision on whether it will sign up to the scheme.
Wednesday, October 28th 2009, 9:42PM
by Paul McBeth
The 38-year-old mutual organisation was given a BB long-term counterparty rating and a B short-term counterparty credit rating by Standard & Poor's, qualifying it for the government to guarantee its deposits, due to its loyal membership base and its capital ratios, according to S&P analyst Peter Sikora.
"Key asset-quality indicators are satisfactory when assessed against the credit-risk profile," Sikora said in a statement. "There is no significant single-name concentration."
Credit Union Baywide chief executive Gavin Earle is pleased with the rating, saying it is a fair indication given rating agencies are cracking down in the wake of the financial crisis, and it opens the door for Baywide to choose whether to enter the government's guarantee scheme or not.
"In the credit crisis, it's the best we could've hoped for in the in the current environment," Earle told www.depositrtes.co.nz. "It gives us options, and we will be looking closer at the time whether other credit unions and building societies take it up."
Baywide will be looking at taking advantage of any opportunities in the current environment, with its foray in personal loans for cars an example of this.
"It's very much a short-term strategy, with the finance companies likely to be back in that space soon," Earle said. "Still, at the moment there's a gap and we will look to cherry pick these opportunities."
Earle also confirmed Baywide will have no problems meeting the Reserve Bank's new capital ratio requirements, noting it was one of the points that supported the credit union's BB rating.
In a separate statement, PGG Wrightson Finance announced it intends to seek cover under the government's extended deposit guarantee scheme. In a statement, director financial services Mike Darrow said the company decided to apply for the scheme when it discovered it will be able to offer investors guaranteed and non-guaranteed products at the same time.
Check out Baywide's home loan rates here
Paul is a staff writer for Good Returns based in Wellington.
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