UDC more dependent on ANZ

UDC Finance's funding from its parent ANZ National increased sharply recently and will likely pose a risk to the limits on related party transactions when stricter norms for finance companies come in to effect later this year.

The finance company borrowed NZ$275 million in the six months to March 2010, and accessed a further NZ$50 million in June under a committed facility with ANZ National. Equivalent borrowings stood at NZ$50 million at the end of September 2009.

UDC has a NZ$650 million facility with ANZ National which has increased from NZ$500 million in March 2009. The liquidity facility is a key tool at the hands of UDC to manage its liquidity risk.


As of March 2010, the borrowing of NZ$275 million formed nearly 17 per cent of UDC's total borrowings of NZ$1.63 billion and this would have increased further with the additional drawdown of NZ$50 million by June.

As a proportion of capital, the borrowings would exceed 100 per cent whereas the new regulation for finance companies that come in to effect in December 2009 states that exposures to related parties should not exceed 15 per cent of capital.