The Bank Of New Zealand

1000 WordsMay 3, 20154 Pages
The investors were attracted to invest in the housing sector due to the rise and the banks and lenders also felt secured to lend them. Over reliance on the high mortgage value made banks feel safe and the quality and standards of loans started getting compromised. When the prices started falling down the problem was raised in whole industry. The banks ANZ, BNZ, Westpac and ASB are considered four big banks of New Zealand. According to RBNZ (2005) these four banks were holding 65% of total asset being held by entire financial sector of the country. Thus I believe the study of these banks will provide the fair condition of banking sector of the country. The banks of New Zealand follow the guidelines of the reserve bank of New Zealand (RBNZ) for their operation. The credit risk management practices of these four big banks are controlled by the regulations of RBNZ. The RBNZ has also specified various parameters to be followed by the banks to tackle credit risk. For example according to RBNZ (2014) the period of 2012 -2013 saw the speedy increase of the housing prices which created the risky situation. To mitigate the situation RNBZ introduced the rule which requires banks to hold more capital against the loans with high LVR. This have created the more balance on the risk level of the housing market. The urgency of proper credit risk management for wellbeing of the banks has inspired me to check whether the risk management practices of the banks have created the situation
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