Interest controls catch Rural Bank

Press, 13 June 1984, Page 32

Interest controls catch Rural Bank

PA Auckland The state-owned Rural Bank fell victim to the latest Government interest rate controls yesterday and was forced to take some of its rates off the market. The bank’s No. 2 issue of $5O million guaranteed stock was offering 10.75 per cent for five to seven-year terms, which was 0.25 per cent above the Government’s new maximum for deposits of less than $lOO,OOO. The bank’s director of funding, Mr Cliff Mail, said that new rates were being worked out and would be

offered soon The remaining stock, up to the allowable 10.5 per cent for three year deposits, would stay on the market.

Mr Mail said the issue, which opened on May 15, for six months was “meeting expectations.” It followed a highly successful issue in February for $lO million stock. That issue, offering rates up to 11.75 per cent opened and closed in a week $l5 million over-subscribed.

The Dairy Board’s $5O million debenture issue, also offering up to 11.75 per cent closed on May 31, escaping the regulations.

A board spokesman. Mr Quentin Golder, said there were plans to go back into the market but not in the short term. “The board has several areas of finance and in the next couple of months I can't see us going outside our resources at all." That issue attracted $47 million. Meanwhile, finance houses were yesterday predicting a general tightening of lending. The general manager of the ANZ Bank-owned UDC Group, Mr Ted Baker, said the latest interest on deposit regulations — restricting finance house borrowing for small sums to 10.5 per cent — were similar to the regulations of July 1982 marking a return to “a very tightly controlled market.”

“Certainly the rates are different than in 1982 but I think without a doubt it is going to make it even tougher for the man in the street to get credit,” he said. “The Government intends getting money for its ‘Our New Zealand Bonds’ and has pitched the regulations so that the investor’s dollar goes into the bond. “It was difficult for private sector finance groups and will affect the supply of money for hire-purchase and even industrial finance.”