Wairarapa Building Society is unfazed by predictions small financial institutions might be rocked by the Christchurch earthquake.
Standard & Poor's Ratings Services said this week that it expected major banks to remain stable but for smaller players to face downward rating pressure.
Alex Tulloch, general manager of Wairarapa Building Society (WBS), said
he suspected this prediction related mostly to South Island institutions such as the Combined Building Society and the Southland Building Society.
Those institutions had huge exposure in Christchurch and, while major banks would take a hit, their risk was spread across the entire country.
Mr Tulloch said the biggest effect on WBS would be if people starting pulling out money and, in a state of panic, erroneously associated those South Island building societies with his own.
WBS would be affected by any change the Reserve Bank made to the official cash rate following the earthquake.
The rate stood at 3 per cent and some analysts had predicted it would drop to 2.5 per cent to stimulate the economy.
But Mr Tulloch couldn't see how that would solve the major problem, rebuilding Christchurch, but said whether it was lowered or kept the same rate it created a disconnect between the retail and wholesale financial markets that squeezed WBS's margins.
He believed the bigger long-term risk for the country was whether global reinsurers decided to pull out of New Zealand and Australia after the fires, floods and earthquakes.
Most New Zealand insurers buy reinsurance from global companies to cover them in the event of a catastrophic payout, such as a natural disaster.
Mr Tulloch had read reports reinsurers were tepid about covering Australasian insurers and this could mean a big rise in insurance premiums.
The Christchurch earthquake is estimated to be the biggest global insurance payout since 2008, according to JPMorgan Chase, costing about $16 billion.
