For example, the major New Zealand registered banks have quite legitimately set up offshore subsidiaries for the specific purpose of accessing offshore capital markets to fund their lending activities.
These legal structures enable banks to avoid the 2 percent Approved Issuer Levy (AIL) that is levied on the interest paid to raise the capital, as the capital raised by the subsidiary is then loaned back to its parent. 9 Similarly many New Zealand corporates rationally choose to borrow directly in offshore  7  Richard J.