New Zealand’s financial reputation took another hammering...

New Zealand’s financial reputation took another hammering last week when the nation’s central bank appointed state overseers for the bankrupt DFC New Zealand, a major investment bank.

Salomon Brothers owns 20% of the failed bank, while New Zealand’s largest pension fund holds 80%.

Reserve Bank Governor Donald Brash took control after DFC directors told him that their bank, which has total assets of about $1.76 billion, faced serious financial difficulties because of losses in the past six months.

“The collapse of DFC is the most serious collapse that we have had since the deregulation of markets in 1984,” said Paul Collins, chairman of New Zealand’s largest pension fund, National Provident Fund.

Formerly known as the Development Finance Corporation, DFC was set up by the government to finance new ventures. The government sold DFC last year for $65 million to National Provident and Salomon. The bank posted a net loss of $2.9 million in the year to March 1989.