The New Zealand Banking System and the Fed's Rate Raising

New Zealand banks are most amongst the most resilient banks in the world. They have increased the capital ratios and they will be about close to 20% now, which is very high compared to other countries. So I think banks will manage quite quickly. On the other hand, there will be a bit of a squeeze because, you know, the higher interest rates.

Play episode from 48:08

chevron_right

Transcript

chevron_right

Transcript

Episode notes

The more capital a bank holds, the more losses it can take before going bust. Dr. Martien Lubberink, professor at Victoria University of Wellington, joins Forward Guidance to define regulatory bank capital and put it in context of the conspicuous bank meltdowns in March. Lubberink opines on the issues at Credit Suisse & Silicon Valley Bank through the lens of bank capital, and he shares insights on the health and nature of the banking system of New Zealand, where he currently resides. Filmed on April 6, 2023.

Follow Martin Lubberink on Twitter https://twitter.com/cetier1

Read Martin Lubberink’s blog at https://capitalissues.co/

Follow Jack Farley on Twitter https://twitter.com/JackFarley96

Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidance

Follow Blockworks on Twitter https://twitter.com/Blockworks_

Pieces discussed in the interview:

“The Value of Kiwibank”

Fresh RBNZ Dashboard data shows New Zealand’s largest banks on track to meet increasing capital ratio requirements”

Apply to host the “Lightspeed” podcast on Blockworks

____

Use code GUIDANCE10 to get 10% off Permissionless 2023 in Austin:

https://blockworks.co/event/permissionless-2023

Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/

____

Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:

https://rb.gy/5weeyw

Market commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos

____

Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Timestamps:

(00:00) Intro

(01:39) Lubberink's Background In Bank Capital During The Great Financial Crisis (GFC)

(08:04) What Is Bank Capital?

(13:37) Silicon Valley Bank Was A Masterclass In "How To Not Run A Bank"

(18:16) Banks' Hedging Of Interest Rate Risk

(25:55) Permissionless

(26:59) Important Regulatory Bank Capital Ratios

(37:26) Credit Suisse & Additional Tier 1 Bonds

(46:14) Operational Risks

(48:11) "New Zealand Banks Are Among The Most Resilient Banks In The World”

(51:32) Interest Rate Hedging Again (Jack Is Obsessed)