CHINESE BANK SETS UP SHOP IN NZ
Thursday September 17th, 2015
Some big Chinese banks are starting to set up shop in New Zealand, but what could that mean for the residential mortgage market?
There have been recent reports that the Industrial & Commercial Bank of China (ICBC), which began lending last year, has been making inroads into the mortgage market.
Also, the China Construction Bank and the Bank of China are said to be establishing themselves in New Zealand.
Kiwis are unlikely to begin switching their accounts over to the newly established Chinese lenders en masse, but Massey University's David Tripe said the main competitive threat to local banks would be in trade banking - New Zealand companies doing business in China and Chinese firms coming in the opposite direction.
These banks might prove to be an attractive “familiar face” option for Chinese people in New Zealand, but are unlikely to have a big impact.
They are currently lending at the same rate as the major banks but the greatest fear would be that they will start lending at Chinese interest rates, which could led to a flood of buyers on to the market.
This is unlikely to happen. But there is probably an unwarranted fear about it which is related to that fear of ‘overseas’ buyers in the New Zealand market.
The reality is that the face of Auckland is changing. A lot of people are coming here from Asia and have existing relationships with these lenders which, in turn, could make it easier to borrow in New Zealand.