Rabobank NZ CEO tells MPs 'we're doing our bit to create competition in the New Zealand market'

Rabobank New Zealand Chairman Chris Black has told politicians the words "maverick" and "banking," "don't correlate particularly well."

Black, and Rabobank NZ's CEO Todd Charteris appeared in front of the parliamentary banking inquiry, being undertaken by the finance and expenditure and primary production committees, on Wednesday.

Black's comments came after MPs noted the Commerce Commission's recent market study pointed out the NZ banking sector lacked what it described as a "disruptive maverick bank."

"I think the idea of having maverick banks is unusual. In the banking sector you want a strong, stable, secure organisation. So to me, maverick and banking sort of don't correlate particularly well. And if you look at the regulation that we are required to comply with, whether that's [from] the Reserve Bank ... there's a lot of investment, most of it goes on regulatory and compliance," Black said.

In its recent market study the Commerce Commission bemoaned the lack of a disruptive maverick bank, saying there's no particularly aggressive or innovative provider exerting disruptive competitive pressure on the big four banks. It said there's no bank of significant scale adopting a significantly different business strategy or offering a novel product offering.

The Commerce Commission recommended the Government bolster Kiwibank's capital, saying this may allow it to become a maverick disruptor in the short term. Finance Minister Nicola Willis pledged to act on this and the Commerce Commission's 13 other recommendations. 

The market study, however, covered personal banking services focusing on home loans and deposit accounts. Rabobank is a specialist rural lender where it competes with the big four banks, albeit it does borrow money via retail deposits.

Black and Charteris were also asked to respond to a Federated Farmers survey that suggested 22% of NZ farmers think their banks aren't allowing them to structure their debt in the most efficient way.

Charteris described this as "concerning," saying Rabobank NZ had spoken with Federated Farmers about the survey.

"That's something that we've talked about as a team and made sure to remind our people that this is what the farming base is saying through the survey. [But] we don't tend to get the same feedback. We run our own specific Rabobank customer surveys and we don't get those sort of numbers," Charteris said.

"But we certainly took that on notice and have looked to front foot and understand where are those challenges and making sure that we're not contributing to it."

Separately Charteris said Rabobank NZ had appointed 16 receivers over the last 10 years, with just five - or one a year - since Parliament passed the Farm Debt Mediation Act in 2019.

"And that was a good piece of legislation."

Asked about Rabobank's lending margin on loans, Charteris said this averaged about 200 basis points, with its commercial net interest margin, including the retail deposit side of the ledger, about 230 basis points.

In its written submission to the parliamentary banking inquiry Rabobank NZ said as of June 30 this year, it had 21.7% of NZ’s rural lending market, behind market leader ANZ NZ and vying for second with BNZ. Rabobank NZ said it provided 40% of all new lending to the rural sector over the first six months of 2024. Over the 15 years to 2023 the bank said it provided 30% of new lending to the agriculture sector.

"I can only comment on the rural market because that's all we participate in. I think there's five strong banks in that. And I make that statement because there's no one dominant bank. Every bank is between 14% and 24% or 25% market share. So I think it's well distributed. We've grown our market share," Charteris told MPs.

"So we think we're doing our bit to create that competition in the New Zealand market."

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