Westpac New Zealand has cut the size of one readily available source of cash by reducing the amount of its internal mortgage-backed securitisation programme to NZ$5.0 billion, from NZ$7.5 billion.A big portion of these securitised assets, now NZ$4.75 billion compared with NZ$7.25 billion a year earlier, consists of senior-rated securities that qualify as eligible collateral for repurchase agreements with the Reserve Bank of New Zealand.A reduction in internal securitised assets has coincided with the transfer of secured loans to Westpac NZ Covered Bonds Ltd, which is currently in the process of making its first covered bond issuance in euro-denominated bonds. The bank has transferred NZ$2.75 billion of loans to Westpac NZ Covered Bonds.For the quarter ended December 31, 2010 Westpac's activity was largely concentrated around short-term business because of lack of any growth in the loan book.Westpac saw a 2.5 per cent increase in deposits, but the bank mainly invested in government securities, pending a pick-up in demand for loans from businesses and households.Deposits grew to NZ$31.2 billion, thanks mainly to a significant increase in non-interest bearing at-call deposits, which rose to NZ$2.6 billion, up 9.9 per cent. Term deposits rose 2 per cent, to NZ$18.1 billion, while interest bearing on-call deposits also increased, by 1.4 per cent.The December quarter also saw Westpac increase its reliance on short-term debt,  as short-term commercial paper rose 6.2 per cent, to NZ$6.9 billion, while long-term debt fell to NZ$8.5 billion, from NZ$8.8 billion. This was entirely due to a drop in euro medium-term notes.Gross loans and advances rose to NZ$50.8 billion, up just 0.1 per cent over September, with tiny growth seen in housing, credit card and non-housing loans.Overall, credit quality was mixed, with a rise in past due loans but a drop in impaired assets. Total past due assets grew to NZ$2.2 billion, from NZ$2.1 billion in September. Impaired assets fell to NZ$687 million, from NZ$742 million, mainly because NZ$160 million of impaired assets are now performing again.