New Zealand mortgage funds suspend withdrawals

Business Materials 28 October 2008 10:02 (UTC +04:00)

Axa New Zealand Ltd said Tuesday that it had frozen three managed mortgage funds worth a total of 225 million New Zealand dollars (121.5 million US dollars) to head off a feared run of withdrawals from 5,000 investors, dpa reported.

Ralph Stewart, chief executive of the insurance and investment management firm, said withdrawals from the Mortgage Distribution Fund, Mortgage Investment Fund and Axa Investment Portfolio had been suspended for 30 days.

New investments in the funds have also been suspended although investors would receive scheduled interest payments as usual, the firm said.

Stewart told Radio New Zealand that there had not been a rush of withdrawals but there was "confusion and ambiguity" in the minds of investors because the government's proposed deposit guarantee scheme currently excluded managed funds.

He said banks and financial companies, which collect deposits from investors to fund mortgages, had already been included in the guarantee scheme.

Stewart said Axa was working with trustees and the central bank to try to find an "equitable solution."

He said publicity about frozen deposits in mortgage funds in Australia, including by Axa, was also a concern.

Statistics released this month showed that Axa New Zealand's total funds under management fell 29 per cent, or 2.8 billion New Zealand dollars, over the nine months that ended September 30.