Banks offer support to help quake victims

Banks are lining up to offer victims of the Canterbury earthquake cheap loans and deferred repayments to help get them back on their feet.

The moves follow discussions between bank bosses and Finance Minister Bill English, who called on banks to be flexible with customers recovering from Saturday's 7.1 magnitude earthquake, which caused widespread damage to Christchurch.

"I was impressed with their willingness to be flexible – well, as flexible as banks will be. But they indicated they understand their customers are under pressure," Mr English said.

"They do seem to be willing to be a bit accommodating."

The banks would have a key role to play, along with insurance companies, in the pace of reconstruction, he said.

However, their generosity was going to be tested as time went on.

The support packages generally include suspending repayments on loans for three months, or interest-only payments.

However, the unpaid payments and interest would be added to the loan.

They also included short-term emergency overdraft or credit card limits to tide people and businesses over, as well as loans at discounted interest rates.

Some fees would be waived for early repayment of fixed-interest rate mortgages or withdrawals of term deposits.

In addition, the banks have collectively donated $3.5 million to various relief funds in Canterbury.

ASB was also using the earthquake as an opportunity to attract more retail deposits by launching a new term deposit with the lure of promising to donate $10 to a Christchurch charity for every investor who deposits more than $10,000. The country's biggest bank, ANZ New Zealand, said it had approved more than $500,000 in emergency loans to businesses in the past two days to cover staff wages and replace perishable stock.

Westpac would lend up to $1 billion to Christchurch businesses for rebuilding and waived establishment fees.

Westpac head of business banking Ian Blair said businesses emerging from recession lacked the spare cash to cope with disruption from the earthquake.

"It is incumbent on banks to support businesses through that time," he said.

So far only an estimated 10 per cent of Westpac's business customers had applied for emergency funding, he said.

Massey University director of banking studies David Tripe said the banks would not be making a fortune from the lending, "but it has got to be seen in the context of responding to the society within which you are trying to do business".

Banks that were seen not to be supporting a community risked losing customers.

"If you respond in an unhelpful and unfriendly way at times like this, people will remember," Mr Tripe said.

- © Fairfax NZ News