Bank of New Zealand has revealed that it has repaid all its unsecured loans from its parent, National Australia Bank, as it moved to reduce its reliance on offshore wholesale funding. BNZ chief financial officer Adrienne Duarte gave a speech to the Trans-Tasman Business Circle this week about the reliance of New Zealand's banking system on offshore wholesale funding, which has been a factor cited by ratings agencies limiting New Zealand's sovereign rating and the ratings of its banks.Duarte said BNZ had worked to reduce its vulnerability since 2009, when local bank system lending exceeded local deposits by NZ$132 billion. That gap has since narrowed to NZ$96 billion as deposits have increased and lending slowed sharply."We are now into our fourth year of dollar-in-dollar-out, making sure we fund our new lending with locally grown deposits," she said, adding that BNZ's level of wholesale funding had been capped."We have also diversified our funding sources enough to repay all the senior unsecured funding lent to us by our parent, National Australia Bank," she said."This latter fact is a key achievement and we are the first of our peers to be independent of our parent from a funding perspective - a bit like growing up and moving out of home - you are independent but you can always rely on your parent if you need a place to stay. All large New Zealand banks should be encouraged to do this."