New Zealand

The man behind what is thought to be New Zealand's largest Ponzi scheme has been sentenced to 10 years and 10 months in prison, The New Zealand Herald reported. Wellington financier and former head of the Ross Asset Management group, David Ross, was sentenced in the Wellington District Court by Judge Denys Barry today. Ross had pleaded guilty to five charges brought against him by the Serious Fraud Office, including four for false accounting and one for theft by person in a special relationship.

New Zealand's dairy sector is still highly indebted and vulnerable to a fall in record high commodity prices and rising interest rates, according to the Reserve Bank, The New Zealand Herald reported. High levels of agricultural debt, which is heavily concentrated in the dairy sector, poses a risk to the stability of the financial system, deputy governor Grant Spencer said at today's release of the central bank's six-monthly financial stability report.

Solid Energy has secured its restructuring deal with most of its banks and the Government following a series of meetings today in Christchurch, The New Zealand Herald reported. The state owned coal miner said it received "majority support" from its five bank creditors and note holders at the meetings. Bank of Tokyo-Mitsubishi UFJ Ltd has not agreed to the deal, but its opposition will not stop it from going ahead. While it had the support of most of its banks, "certain of the arrangements are still subject to legal challenge" Solid Energy said.

Tachikawa Forest Products (NZ), the owner of the Rotorua sawmill tipped into receivership last week, was in breach of its banking covenants for the past two years, and had its 2012 accounts tagged by auditors over a working capital deficit, Scoop.co.nz reported. KordaMentha’s Grant Graham and Brendon Gibson were appointed receivers on Friday, ending the Japanese-owned wood processor’s attempts to regain profitability after successive years of losses that had accumulated to $12.5 million as at Dec. 31.

A move by the Bank of Tokyo to challenge the Solid Energy debt restructuring deal could backfire, leaving the bank being owed even more money, says Finance Minister Bill English, The New Zealand Herald reported. A debt restructuring process aimed at rescuing the struggling state-owned coal miner Solid Energy was announced on October 1. The Auckland branch of Bank of Tokyo-Mitsubishi UFJ is recorded as the second-largest lender to Solid Energy and is opposing the proposed deal. Last week It lodged proceedings in the High Court in Auckland challenging the process.

The BNZ, Bank of Tokyo-Mitsubishi and TSB Bank are the Solid Energy lenders who will face the biggest "haircut" on monies owed by crippled state coal miner Solid Energy, Interest.co.nz reported. Bank of Tokyo-Mitsubishi is reported to be taking legal action to try to veto a debt restructuring deal. At this stage if it came to a straight vote (which requires a 'yes' from lenders holding 75% of the outstanding debt) it appears likely that it would be outvoted by other lenders.

A small business accounting specialist is warning new bank lending restrictions which come into force today will make it tougher for people to buy, grow and fund small businesses, The New Zealand Herald reported. Matthew Bellingham, chairman of the public practice advisory board for the New Zealand Institute of Chartered Accountants and a partner at Auckland firm Bellingham and Wallace, said new loan to value ratio restrictions would have "unintended consequences" on the sector.

The New Zealand government said it will pump up to NZ$155 million ($128 million) into Solid Energy and private lenders will swap some debt for equity under a plan to save the troubled coal miner, which is slated for partial privatization, Reuters reported. The proposed restructuring plan will see the state-owned company issue NZ$100 million of redeemable preference shares, with key lenders exchanging NZ$75 million of debt for equity and the government injecting NZ$25 million.

New Zealand's banks have already started tightening up their lending criteria for customers seeking low-deposit mortgages, despite new regulations not kicking in until next month, The New Zealand Herald reported. The Reserve Bank's new rules, announced last month amid fears of a housing market meltdown, restrict banks in how much of their money they can lend to home buyers with less than 20 per cent deposit.

New Zealand Prime Minister John Key said that the country's central bank is right to consider new tools to curb housing demand, including limits on low-deposit mortgages, Bloomberg News reported yesterday. “Absent of any other alternative, then rapidly increasing house prices may see the Reserve Bank raising interest rates,” Key said. Limiting lending on deposits of as little as 5 percent of the purchase price will hurt first-home buyers, who are struggling to save bigger downpayments as New Zealand house-price inflation accelerates.