This week, financial markets were spooked by the write-down of Additional Tier 1 securities of Credit Suisse. Soon after the writedown, a discussion ensued regarding its legitimacy. One camp argues that investors in these securities should have read the instruction manual. See the pointy opinion piece in IFR by Prasad Gollakota, the former co-head of… Read More What happened to the whipping boy of bank capital?
As you may have noticed, Radio New Zealand, a dominant player in the New Zealand media landscape, featured banks frequently this week. There were valid reasons for that. There was the demise of Silicon Valley Bank, which sparked unrest in the financial markets, which then affected Credit Suisse, the sickest bank in Europe. It is… Read More Radio New Zealand and KPMG on banking this week.
Yesterday, the New Zealand Treasury informed me that the files about the sale of Kiwibank would be released. The information release was originally scheduled for the start of November. However, Treasury delayed its documents release on Project Korimako until yesterday late afternoon, when most people’s minds were on the holidays. The link to the Treasury… Read More Project Korimako: The Kiwibank files
My last post covered the valuation of Kiwibank and its parent company, Kiwi Group Holdings Limited. As you may know, in August, the government decided to acquire this banking group. While most of the attention focused on the sale of Kiwibank, little attention was paid to the sale of Kiwi Wealth, the group’s wealth and… Read More The mysterious sale of Kiwi Wealth
Prompted by the announcement of the government acquiring Kiwibank for $2.1 billion, I wanted to know how they calculated that. The amount is large, about $400 per New Zealander. If you spend over $400 on something, I’m guessing you’d want to know why $400 and not one dollar, or perhaps $350? In the last couple… Read More The Value of Kiwibank
Today’s updated RBNZ Financial Strength Dashboard shows that New Zealand’s largest banks are on track to meet the increasing capital ratio requirements. This after a temporary set-back in the first quarter of the year, when new rules on the calculation of risk weights kicked in. Westpac was particularly hard hit by the new calculations, but… Read More Fresh RBNZ Dashboard data shows New Zealand’s largest banks on track to meet increasing capital ratio requirements
With Grant Robertson’s announcement today that Kiwibank will be acquired for $2.1 billion from its state-owned shareholders, it is clear that the government hasn’t learned much about banking since the global financial crisis. Despite Robertson’s cynical spin about establishing a bank that is fully Kiwi-owned, one that keeps all profits in New Zealand, and will… Read More New Zealand’s bailout of Kiwibank
My review of a fascinating book on swaps, derivatives, and Dutch supervisory shenanigans by Hester Bais and Wink Sabée The book by Hester Bais and Wink Sabée documents poor conduct by banks in the Netherlands during the first decades of the century. Warning: for non-Dutch readers, the book is only in Dutch now, but I… Read More ‘Worst Bank Scenario’ a book that should spark a discussion on bank supervision
In my latest post on The Conversation, I argue in favour of disclosure of stress test results of individual banks. The current hot housing market creates fertile ground for speculation about the financial stability of the New Zealand banking system. See the latest addendum to the RBNZ Financial Stability Report, which creates the impression that… Read More The Conversation: “Why now would be a good time for the Reserve Bank to publish stress test results for individual banks”
The Reserve Bank of New Zealand just published its latest Financial Strength Dashboard data. It is now up to date until 31 December of last year. A summary Capital went up. Largely thanks to restrictions on distributions and perhaps a donation from a generous parent bank, aggregate CET1 ratios are now well over twelve percent.… Read More Fresh RBNZ dashboard data confirms New Zealand’s banks are resilient – again