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[Weekly Wrap] Getting the chop

Standard & Poor's has taken the axe to the credit ratings of the Australian banks, but they weren't the only things getting cut in the financial sector this week.Niko Kloeten rounds up the week's news.

Friday, December 2nd 2011, 5:51PM

The mass ratings downgrade, which took the banks and their New Zealand subsidiaries down a notch from AA to AA-, is big news even though many other banks around the world faced similar downgrades after the ratings agency changed its methodology. It could force banks to borrow at higher interest rates.

An interesting aspect of S&P's assessment is its assumption of some form of 'support' for the banks from Aussie taxpayers if things turn south. Perhaps Australia should look at something similar to Reserve Bank of New Zealand's Open Bank Resolution policy before any further taxpayer 'support' is required.

Another financial entity feeling the sharp edge of a razor was Mercer, which has been replaced as asset consultant for AMP's multi-manager funds. AMP's choice of Towers Watson, which already works with AXA's ipac multi-manager funds, makes sense as it avoids unnecessary duplication.

Removing duplication was also a key factor in the recent changes at OnePath/ANZ Wealth, where a surgical scalpel has been taken to the investment team.  ANZ Wealth general manager Simon Botherway said there had been some overlap between OnePath's Auckland-based team and ANZ Wealth's Wellington-based team. And the frozen funds debacle had nothing to do with it.

Meanwhile, there was bad news for investors in OnePath's PPS Mortgage Fund, which is being wound up. Payments are on hold for now and the FMA says it won't take any action because OnePath complied with its trust deed.

OnePath's parent ANZ has seen its profit increase but its loan book has shrunk for a second straight quarter. SBS Bank also saw its mortgage book shrink, but its profit decreased as well.

One organisation that could do with a bit of trimming is the bloated US Federal Government. Instead of cutting spending to reduce its multi-trillion dollar deficit it has opted for Plan B - write a draconian tax law that infuriates every other country in the world. Read what it could mean for your business here.

Offer documents are often sketchy on certain aspects and financial advisers should be asking questions of fund managers to ensure they are informed enough to properly advise their clients, according to Pathfinder executive director John Berry.

What if cars were regulated in the same way as insurance?  You could probably buy a dangerous car as long as the adviser gave you a proper business statement. Russell Hutchinson says insurance regulation needs a stronger focus on the products.

NZF Group's deal with Australian non-bank lender Resimac has significant benefits but also some negatives, according to a new report. NZF Group has suffered a bottom-line loss of more than $11 million in the six months to September 30, mainly due to the collapse of its finance company.

And tough conditions have forced Heartland Building Society to reduce its profit forecast.

« Repayments of OnePath mortgage fund delayedKiwiSaver mismatch a 'huge challenge' for advisers »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 4.05 4.49
ANZ Special - 3.55 3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.55 3.89
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 ▼4.65 ▼4.80 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.97 4.05 4.39
Kiwibank ▼5.15 4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 ▼4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 ▲3.55 3.89
Sovereign 5.30 3.89 4.05 4.39
Sovereign Special - 3.39 3.55 3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.19 4.35 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.39 3.55 3.89
Wairarapa Building Society ▼5.50 ▼3.95 ▼4.05 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.55 3.99
Median 5.34 3.97 4.05 4.39

Last updated: 24 January 2020 8:55am

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