The New Zealand online subsidiary of Dutch bank Rabobank had $1.5 billion in deposits from about 40,000 customers, general manager Mike Heath said.
Rabobank, which has the highest possible credit rating from ratings agencies Standard & Poor's and Moody's, also raised $900 million in an oversubscribed bond issue paying an initial interest rate of 9.29 per cent. All money raised in New Zealand is used rural sector lending in New Zealand. Mr Heath said there was plenty of demand for borrowing from farmers. Finance companies have seen investor reinvestment rates plunge after 13 failures in 18 months, affecting about $1.5 billion in investor funds.
The funding squeeze would continue for those companies and there would be more rationalisation, Mr Heath said. "In the next three to six months, more are going to fall over because of the concerns that the investors are having. They really are concerned about the risk." Ironically, new measures to better protect investors, such as mandatory credit ratings, would further stimulate the flight to managed funds and term deposits because most finance companies would have a low rating.
"It has taken some pain in the last few months, but I think New Zealanders are finally understanding the risk versus return question." A survey in June found that 70 per cent of investors made the decision on the interest rate being paid, rather than the overall risk of an investment.
RaboPlus has increased its managed funds portfolio to 11, adding Cash Advantage Plus, in conjunction with AMP Capital Investors, taking its funds under management to about $16 billion.