Friday, February 29, 2008

New Zealand a depositors' paradise

As a depositor, rather than a borrower, I should be "rubbing my hands with glee", Roeland van den Bergh writes in the February 28 edition of The Dominion Post.

Under a headline that reads Banks Eager to Chase Kiwi Customers' Cash, Van den Bergh quotes from a report by financial services research firm Cannex This says that, as the cost of borrowing on the wholesale market has soared, New Zealand banks "[have turned] more and more to the mum and dad depositors, also known as the retail market, to boost their deposit base".

"The competition for a greater share of deposit accounts . . . is great news for consumers, who can now make more money by parking their cash in a suitable savings account," Van den Bergh quotes Cannex analyst Jeremy Ooi as saying.

The Dominion Post article continues: "Reserve Bank figures show retail deposits with main banks reached $76 billion in December, up $9 billion from a year earlier and from $58.8 billion in 2005. Non-bank financial institutions held another $10.6 billion in the December quarter, steady on the year before."

Underlying recent trends, Cannex says, is "the continuing effects of the global credit crunch, the possibility of a US economic slowdown and the high volatility currently playing out in the share market". Combined, these factors have "resulted in a wave of financial uncertainty washing over much of the nation".

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