Banks warned quake loan defaults could cost $300m

5:58 am on 16 March 2011

The Director of Massey University's Banking Management Centre says a wave of business failures in Canterbury could result in bad bank loans worth hundreds of millions of dollars.

Westpac New Zealand has warned the February earthquake could cost the bank between $30 million and $100 million in credit losses.

David Tripe says the bank is probably insulated from bad housing loans by insurance and the figure suggests Westpac expects a lot of businesses to fail.

He says taking all other banks into account, the Westpac warning suggests defaults on business loans could climb as high as $300 million.

The key tourist industry in Canterbury is already struggling and the Hotel Council warns there will be job losses.

English New Zealand represents language schools and its chair Rob McKay says students are deserting Christchurch and many schools have already closed.

He says he believes the language industry will survive but the coming months will be very tough.