AMP latest casualty of New Zealand property rot

The group's stumble came as the chief of several Mirvac-run funds also suspended this week said they should be able to recover most of the loans made to troubled property developers.

The number of NZ finance companies, mortgage and investment trusts to run into difficulties in the past two years had hit 36, market monitor interest.co.nz said after the $300million AMP Capital NZ Property Fund was suspended.

With investors rushing to withdraw money from non-bank finance companies, the country's troubled funds now total about $4 billion.

The money was drawn from more than 150,000 investors, according to the website.

AMP Capital New Zealand managing director Murray Gribben said it was "difficult to understand" why investors lost confidence in the fund because it had about one-third of its investments in buildings occupied by government.

"There seems to be a sentiment around property and property exposure which is causing these issues," Mr Gribben said.

"The lack of confidence is a little endemic and it is running across the market."

In a bad week for the NZ industry, Guardian Mortgage Fund, owned by Suncorp-Metway, also froze withdrawals by investors on Wednesday.

While the Australian market is not in such dire straits, the credit squeeze is causing problems for local property and mortgage funds.

Mirvac Aqua suspended three funds this week, which have invested about $240 million on behalf of hundreds of small investors and financial planners.

Mirvac Aqua chief executive officer Stephen Tunley said the decision was based on concerns about several loans to developers exposed to falling property prices.

Normally, he said, the developers would be able to refinance with a bank or a different finance group.

But for ventures like Mirvac Aqua, the absence of bank credit has made it more difficult to move troubled loans off the books.

The potentially troubled loans were worth $39 million, Mr Tunley said, but the risk was "very modest" compared with total exposure.

Mr Tunley said he was not confident about getting 100 in the dollar back on the impaired loans made to developers in NSW, Victoria and Queensland.

But he was "confident that it will be a lot more than 80 in the dollar".

He said he would work with each developer to work through the issues in the next two weeks.

"I can tell you I want it off quickly, I want it resolved quickly, and I want us to move forward," he said.

"What we've done is the right thing and we are in the right space."

AMP shares fell 50, or 7.6%, to $6.06 yesterday.