KEY POINTS:
The "flight to quality" by spooked finance company debenture investors after several high-profile collapses has driven some companies to the wall but had a surprisingly small effect onoverall funding for the sector, Reserve Bank data suggests.
New Zealand dollar funding for finance companies fell from $8.7 billion at the end of the September quarter to $8.4 billion three months later, a drop of just over 3 per cent.
Over that time, many finance companies reported lower reinvestment rates and new money inflows, generally attributing that to deteriorating sentiment after the collapse of Bridgecorp in May helped to trigger further receiverships.
While 17 finance companies, including Lombard Finance last week, have either failed completely or run into trouble, the carnage so far has been limited to smaller companies and a handful of mid-sized companies.
About half of New Zealand's total finance company assets are held by the top three firms - UDC, South Canterbury Finance and Marac - all of which hold investment grade ratings from international agencies.
On Thursday, Lombard's chief executive Michael Reeves reiterated previous comments, when it emerged his company was in trouble, that it had fallen because of "a systemic failure of an entire industry sector".
While it remains unclear whether Reeves was referring to the property development finance sector or the wider finance company industry, his view has gained little currency among other industry figures.
Marac Finance managing director Brian Jolliffe said that while prudence was the order of the day, "there is good business to be had here by those that are operating reasonably good conservative policies".
"The reality is we have customers out there that continue to need the services we provide."
Meanwhile, in a statement to the sharemarket on Friday, Reeves said Lombard Group's principal other businesses, United Mortgages and Tasman Mortgages, "are expected to trade profitably".
