21 Dec 2011

Asia could fill gap if Euro lending dries up

7:08 am on 21 December 2011

A bank economist believes Europe's debt crisis will open the door for more Asian banks to set up in New Zealand.

BNZ head of research Stephen Topliss says the biggest risk to New Zealand from the current crisis is that European lenders will become too stretched or fail, cutting a significant credit line for the local economy.

New Zealand banks rely on European and US banks for most of their funds.

Mr Topliss says less lending would mean less economic growth.

He says, while big corporates could go to the public for capital, small- and medium-sized businesses aren't large enough to do that and need the banking system.

However, he says we are already seeing considerable interest by Asian banks in New Zealand and he would be surprised if that trend did not continue.