BNZ failed to return favour, says critic

BNZ refused to allow South Canterbury Finance to tap a long standing but unused $100 million standby facility in recent weeks, despite having benefited from over $200 million in funding from the company during the worst of the credit crunch, commentator Chris Lee says.

"The BNZ, having borrowed heavily from South Canterbury Finance for many years, refused to lend to South Canterbury Finance under its standby facility in recent weeks" the Kapiti coast stock broker said in a commentary yesterday.

"In 2008, BNZ during a time of extreme pressure, borrowed more than $200 million from South Canterbury Finance."

Yesterday Lee told the Business Herald BNZ's decision not to support South Canterbury and its major shareholder Allan Hubbard rankled.

"If I helped you with your puncture four or five times and you didn't help me, I'd be a bit brassed off with you."

South Canterbury chief executive Lachie McLeod yesterday told the Business Herald he was unsure what Lee was referring to.

However he said BNZ had been South Canterbury's banker for many decades and his company had at times had "lots of millions" on deposit with the bank although it normally dispersed its cash holdings among five banks.

BNZ yesterday said it was unable to comment on Lee's allegation and instead referred the Business Herald to South Canterbury's announcement to the market last week where it said an undrawn $100 million standby credit facility with a bank had been cancelled "by mutual agreement".

Two weeks earlier South Canterbury said the facility had been placed on a "stop draw" after its credit rating was downgraded to BB+ by Standard & Poor's.

The company this week said it was now arranging a new $75 million facility with another lender.

Elsewhere in his commentary, Lee says South Canterbury's new prospectus released last week demonstrated media and analysts claims the company's problems resulted from a tangled web of related party transactions were "completely incorrect".