There is no need to rush into a government guarantee scheme for banks' wholesale funding, according to the boss of New Zealand's largest bank.
"No one really wants this impediment in the market place," said ANZ National's chief executive Graham Hodges.
New Zealand has moved to guarantee retail bank deposits and is under pressure to match other countries with a scheme that guarantees wholesale funding.
"This whole concept of guarantees did not start here. It is being considered quite reluctantly by the Crown and frankly by us too," he said.
Mr Hodges repeated that the New Zealand banking system was sound and that ANZ National was one of only 14 banks in the world left with a AA credit rating.
He said ANZ National had been positioning itself for a credit crunch and had $8 billion of liquid assets at September 30.
"As we sit at the moment we are very comfortable with our liquidity," he said.
But international credit markets had very little depth and they may favour borrowers from countries with Crown guarantees.
Mr Hodges said he was confident that markets would work things through. He believes there will be opportunities for well-rated banks like ANZ National.
"The markets have little depth yet but they are better this week than they were in the last couple of weeks."
A decision on a wholesale banking guarantee needed careful consideration. A scheme should be market-based and not too interventionist.
"It is clear to me the officials are looking to market-based solutions, rather than more interventionist outcomes."
Market-based structures for a wholesale guarantee were easier to implement and less distorting.
"They are ultimately easier to take off," he said.
It made sense to try to align any guarantee with the system Australia develops.
Mr Hodges said mortgage lending slowed quite markedly from February this year and the domestic market for deposits has become more competitive.
