Many large banks are foreign owned – especially in New Zealand. Their ‘parents’ are subject to capital requirements in their home and host country. This creates continuous tension as to who gets the lion’s share of capital and failure management support. It would be naïve to expect a foreign taxpayer to bail out a domestic banking crisis.
Coping with CRE problems will not be easy. I expect these problems to be with us for some time to come, with both direct and indirect consequences for many smaller banks.