The global credit crunch hits New Zealand institutions

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Last week, we heard that Australia’s NAB had to take a massive writedown due to American CDO exposure (apparently triggered by Merrill Lynch). Yesterday, we heard about Australia’s ANZ Bank taking it on the chin to the tune of $1.2 million Australian.

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Now, it’s New Zealand’s turn with the problems at the New Zealand Guardian Trust Company. The credit crunch continues to claim more victims globally. This is a truly international crisis.

The New Zealand Guardian Trust Company said it was suspending withdrawals and new investments in its Guardian Mortgage Fund which holds nearly $NZ250 million ($A195 million) for 3,700 investors.

“Due to current liquidity difficulties in the market, the fund is currently operating below its target liquidity rate of 5 per cent,” the company said.

“In such conditions this is not considered appropriate by the directors. In the interest of fairness among unit holders, the directors feel a cautious approach is necessary.”

Sydney Morning Herad, 29 Jul 2008

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