Banks ready for SCF funds

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SBS Bank, Kiwibank and CBS Canterbury are picked as three savings institutions likely to gain a substantial chunk of South Canterbury Finance (SCF) bailout money.

Competition is hotting up among the banks and financial advising community for a share of the $1.6 billion government bailout going to former SCF depositors. SBS, Kiwibank and CBS have been picked by an independent banking commentator as more likely than others to benefit.

Meanwhile financial advisors have advertised special sessions for SCF investors on where next to put their freed up capital. Banks have been on the phones to customers that might have been hit by the finance company collapse.

The common view held by the banks is that the bulk of depositors will tip their money from the government into the security of a mainstream bank account.

But there is other competition. For example Forsyth Barr has advertised "attention South Canterbury Finance investors ... What are your choices?".

The evening seminar on "how to maintain your capital" and "maximise your income" would offer a diversity of options to the former SCF investors, Forsyth Barr investment advisor Ryan Cutts said.

The advertisement had already drawn a "very positive response" from mum and dad investors, he said.

Massey University director of banking studies David Tripe said much of the money would go to the banks, with SBS, CBS and Kiwibank three of the frontrunners particularly in the South Island where the bulk of depositors bailout funds lay.

"The South Canterbury depositors – they'd be quite excited about SBS I would think. It's well-known in the south. Because of the strong Ashburton links of CBS you might also get quite a bit going there."

For such investors there were not many finance companies left, certainly in terms of offering the sort of high rates SCF had offered under the Government deposit guarantee, Tripe said.

Westpac general manager of business banking Ian Blair said the bank would continue to be competitive on deposits, and review rates in the changing market, such as SCF's failure.

"Margins are already tighter in the banking sector than they have been for many years, but I'm sure that each of the banks will be keen to help SCF customers find attractive investment options – and part of that solution is absolutely price." Westpac was also talking to hundreds of existing customers that could be feeling a degree of stress around the SCF failure.

- © Fairfax NZ News