BNZ wants to wind up all outstanding loans to petrol stations over the next six years to reduce or eliminate exposure to fossil fuel risk, CEO Dan Huggins told MPs.
Stuart Smith, Chairman of the Finance and Expenditure Committee (FEC), asked Huggins and BNZ Chairman Warwick Hunt about a Federated Farmers press release, which alleged the bank had a policy against new lending to petrol stations and were requiring existing debt to be paid off by 2030.
Huggins said this was correct but it was because of the credit risk petrol stations could pose in the future, rather than being motivated by climate targets or policies.
“We’ve looked at our exposure to petrol stations and then we’ve looked at the long term future of those businesses, recognising that we expect conversion to electric vehicles to change demand for fuel services”.
“Therefore, from a credit perspective, we’ve said, look, we have enough exposure in that space and don’t want to increase that exposure”.
However, Huggins couldn’t (or wouldn’t) say how big BNZ's lending to petrol stations is currently, and admitted they weren’t just limiting exposure but phasing it out completely.
Smith said he had seen an internal document which said all debt should be amortised by 2030 or thereabouts, which also included a hyper-link to the Net Zero Banking Alliance (NZBA).
Climate 'cartel'
NZBA is a United Nations group, founded in 2021, which helps banks to align their lending and other business activities to match net-zero emissions goals set by governments in 2015.
Goldman Sachs quit the alliance earlier this week, saying it had the capability to achieve its net zero 2050 goal and interim targets without support from the UN group.
BNZ’s Chief Sustainability Officer, Rebekah Cain, appeared on interest.co.nz's Of Interest podcast in August last year to discuss the bank and NZBA’s work on reducing emissions financing.
Smith must be a listener, because he quoted that interview to Huggins several times during the FEC hearing on Wednesday morning.
Finance was a “key lever to pull in order to shift the real economy” because if “something is funded it happens, and if it isn’t funded it doesn’t,” Cain said in the interview.
The FEC Chairman questioned whether it was appropriate for unelected banks to be setting and enforcing climate policies in New Zealand. Federated Farmers has complained to the Commerce Commission that coordinating through NZBA could be cartel-like behaviour.
Huggins said the bank had an obligation to help customers meet climate goals, which have been set by elected governments, and also to write secure loans which will be paid back.
Market forces
Chloe Swarbrick, co-leader of Green Party and a committee member, said the National and Act party members were essentially arguing against free market capitalism.
BNZ’s decision not to lend to fossil fuel businesses was a commercial decision made by a private company in response to the realities of climate change and existing emissions reduction policies.
The Government’s own emissions reduction plan, released on Wednesday morning, set a target of having a network of 10,000 public electric vehicle charging stations by 2030.
New Zealand will likely have two million EVs on the road by the mid 2030s and will stop registering new combustion engine cars, although heavy vehicles may still require fuel.
Petrol stations will face a difficult transition during the next two decades and many may have to shut up shop as demand for fuel falls. BNZ simply doesn’t want to take on this risk.
'Cartel-buddies'
But Ryan Hamilton, a National Party MP, said it was much too soon to be “defunding” petrol stations when only 2% of the country’s vehicle fleet were electric today.
“What do you say to mum and dad investors in petrol stations, who have invested their life savings for a means of income? You are saying you're defunding them with your cartel-buddies,” he said.
Stuart Smith ended the hearing with another hint of possible action the Government could take against the banks, referencing legal action taken by Republican states in the US against investment firms BlackRock, Vanguard, and State Street over their climate policies.
The lawsuit, filed in November, argued the three big investment firms colluded to pressure coal companies to reduce output and drive up electricity prices. It cites the firm's involvement in the Net Zero Asset Managers Initiative, which is similar to the NZBA mentioned above.
In a statement, Federated Farmers said there was no problem with individual companies setting emission reduction targets but it was concerned banks were coordinating in an anti-competitive way.
"For the avoidance of doubt, Federated Farmers are not definitively saying that banks are operating in an anti-competitive, cartel-like way that falls foul of the law. What we are saying is that it sure does look like they are, and we need the Commerce Commission to urgently investigate to give us some answers”.
131 Comments
Seems like a stretch to say that privately owned business that is trying to exit a particular market is anti-competitive.
I am no fans of the big banks, but it is entirely fair for them to chose to leave a market if they want. Is Steve Smith, Ryan Hamilton and the National Party suggesting that they will force a private business to serve a market they dont want to?
They say it's a credit risk, which makes sense. A significant percentage of customers will have electric by 2030, and that percentage will keep growing. Most major car builders are discontinuing internal combustion engines in the foreseeable future. Petrol stations have very expensive tanks that needs replacing every 20 years or so, which requires taking on big debt and then it's a race to pay it off in time. Seems like a sensible decision.
You can't put the Genie back in the bottle. Whilst some people might enjoy commuting in a car that costs 30 cents a km to run most are welcoming the 12 cents a km an electric car offers. Here's a great calculator https://evdb.nz/cost-calc
Remember when apple phones killed BlackBerry? Or Kodak? Or Pig insulin? All industires that could not compete with a better technology. I guess the reason Fed Farmers are worried is because of increased lending to precision fermentation milk protein companies. If they can scale fermentation for less then the price of milk powder who can afford cows?
Precision fermentation milk isn't synthetic its milk without the cow.
https://www.fonterra.com/nz/en/our-stories/articles/fonterra-and-nouris…
As for the fleet even Japan has seen a growth in New Electric cars. Like us they have limited oil and importing it to burn the once isn't very efficient or good for the economy.
You might want to read up on how PF killed the pig insulin industry.
Whilst the meaning of synthetic is to make a thing by chemical synthesis, the product made from using PF is a genetic match for what's being copied in this case milk proteins. The issue is around scale and cost. Precision fermentation uses microbial hosts to produce a particular end product. Other terms used for precision fermentation are bacterial and microbial fermentation. Precision fermentation is used in a variety of ways in both the food industry and pharmaceutical industry to produce biopharmaceuticals.
Most punters see synthetic and think plastic or fake rubber. I'm sure there will always be a market for fresh milk. But the commodity markets will side with best price, especially if the commodity is superior.
https://www.forbes.com/sites/errolschweizer/2022/03/02/what-should-cons…
Thats a great calculator CS. Ive been looking for something like this for a while. Try putting in values for a modern hybrid vs an electric vehicle and you'll find a hybrid is not only cheaper to run, it has a lower initial purchase price, and less depreciation. I for one cant wait until prices of EVs come down further, but uptake will continue to be hampered by increasing RUC charges. I think petrol stations in this country have plenty of life left in them unfortunately.
RUC is just 7.8 cents a KM how is that hampering anything its money that can be spent on improving roads. It would be great if all road users payed the same. As for the calculator is all about the cost of fuel. Try using night rate electricity. Depreciation if you can find a 2 year old EV at a good price buy that and start saving.
While I won't argue that hybrid cars have their benefits in cost savings, I don't yet have enough faith in the electricity supply in NZ to see such mass adoption be supported by means of generation and mass availability of charging stations for longer haul drives, however I wait in hope to be pleasantly surprised.
So is putting mileage on a rental vehicle when travelling long distances. And I get to choose what sort of vehicle best fits where I'm going and who I'm taking.
My non-branded local vehicle rental has a good selection too. And at rates far lower than the big rental firms. Nothing new or too flash but reliable and oh so cheap. Love my guy - retired mechanic who knows his vehicles inside out.
They already are woke - just taking the opportunity to hover up some filthy carbon lucre while the going is good.
"Bankers will soon be able to claim credit for emissions they say their financing has helped avoid, as the world’s largest voluntary carbon accounting framework for the finance industry works on broadening standards."
https://www.bloomberg.com/news/articles/2024-12-03/bankers-to-start-inc…
I don't think its about being woke.
Small changes in demand can make station move from profit making to loss making.
Gas use continue to use for a long time however the number of stations will naturally reduce.
As they reduce there is a risk of loss.
Banks will be weighing this risk vs the benefit of the lending. Its all math.
If this is true then the worst case here is that BNZ will lose a significant amount of profit.
But that's their call, not yours, not the other randos on this thread that want to turn it into a political decision.
Its a business decision and a gamble for sure. It might be a stroke of genius or incredibly silly. But they have the right as a private business to decide the markets they want to operate in.
I'm sure if it is as profitable as people are making out, there will be no shortage of other banks lining up to take their place.
If that business is an essential service then yes. This whole debanking of individuals and businesses based on ideologies not shared by most of the population needs to stop. Everyone should have equal access to banking services.
Because as the poem goes .....
First they came for the Communists
And I did not speak out
Because I was not a Communist
Then they came for the Socialists
And I did not speak out
Because I was not a Socialist
Then they came for the trade unionists
And I did not speak out
Because I was not a trade unionist
Then they came for the Jews
And I did not speak out
Because I was not a Jew
Then they came for me
And there was no one left
To speak out for me
The right to a bank account needs to be legislated / regulated for. IIRC the UK did this after the Coutts Farage debacle
Ok so how would this work in theory. Would the government set up a random number generator which would determine which bank you get assigned to be with?
Or should any bank be forced to take you on, even if you're an unacceptable high risk to their balance sheets / out of region / do not serve their market / they are over capitalised?
Do you see how messy this could get?
For people i understand there needs to be a last resort option to everyone... but business to business, its best left as a commercial negotiation, just like any other business / supplier relationship.
Lol, they are making their decisions based on science and economics, not ideology. Seems like those with ideologies different from the consensus (that climate change is real and emissions need to reduce), are pushing them to change their mind. I find it ironic that this is coming from Fed Farmers, because the decarbonisation of transport will allow more budget for emissions from livestock.
I struggle to see commercial farming without the powerhouse that is diesel fuel. Powering something like a combine harvester or towing many varieties of farm equipment with a tractor is not logical with electricity. Too much forces involved and batteries would have to be enormous and heavy which would negate their benefit. Plus, you can always pour more diesel in a tractor, but it would be far less convenient tryin to swap out a huge industrial battery needed to run one.
You should check out Mike Casey's work and the zero emissions cherry farm in otago, it can and is being done. And their cherries sell for a premium. You don't need to convert everything to electric all at once, but as machines reach their end of life, people would be silly to not consider the latest technologies, electric is usually cheaper over the life of an asset. Pollution is a sign of inefficiency.
K.W. ... Martin Niemöller will be rolling over in his grave at your absurd use of his poignant poem.
Shame. Shame. Shame on you.
Would he prefer if it was "First they came for Gloriavale"? https://www.nzherald.co.nz/business/companies/banking-finance/court-giv…
That is silly. Firstly a business is not a person and The Government is probably the worst entity to decide on another businesses commercial decisons. Your quoted poem is actually an argument against govt interference in peoples lives yet your post is all for it.
The government can choose to enter the market if they wish, but it is still not anti competitive for any business to leave a market if they choose to make a commercial reason to do so.
I disagree, if banks are free to discriminate against profitable and legitimate lawful businesses where does it stop?
Businesses selling fatty foods? Or using plastic? Farmers killing animals? Landlords renting houses? Members of certain political parties? Persons of certain religions or races?
Where's the end point?
Man, NZ needs a Trump to sort this rubbish out.
What do you mean "if" a bank is free to discriminate against profitable and legitimate lawful businesses?
Banks are already allowed to choose who their customers are.
We have no laws guaranteeing the right to banking services. And Trump would never enact such a law. E.V.E.R. !!!
Allowing for population growth yes. When you look back at import data you see a drop when prices go up, most people will consider the running cost of owning a car especially when prices are inflated. Who can afford to burn diesel or petrol if you have access to a cheaper fuel. I appreciate not all do, but that is changing.
Allowing for population growth yes.
I read this as saying that while per capita volumes have dropped, total volumes pumped have increased. Re: your cheaper fuel comment, if we factor in the fact that most Kiwis can't afford a new car whether ICE or EV, we can predict that our aging car fleet will still be almost entirely dependent on petrol and diesel come 2030.
https://www.statista.com/statistics/1249939/new-zealand-regular-and-premium-petrol-consumption/
Although this does show a drop over the last 10 years...
Banks are here to serve the fiduciary interests of their shareholders. Targeting individuals, groups and businesses based on ideological not financial principles is therefore certainly not within the law. The private corporation debanking of Nigel Farage is the UK in an attempt to cripple his political ambitions is a case in point.
Exactly right. It’s no different from insurance companies not wanting to insure houses on the edges of cliffs prone to erosion. It’s their free market, commercial decision to avoid future losses on sunset industries.
However, because it relates to the “environment” his own blind ideology tells him it must be communist or some other drivel.
You fail entirely to distil and debate the salient point here, which is their hypocrisy. If BNZ are sincere then they must stop financing ICE vehicles, stop BNZ cards working at petrol stations, stop cards working on airlines or international travel, stop funding the construction industry, stop financing dairy.
But no, just petrol stations. By your very logic, the fortunes of an ICE vehicle have to be the same as a petrol station?
I speculate it's all a tick the box for ESG reporting to shareholders e.g. debanking those ladies sex-toy business because it is "adult entertainment" but it isn't really what the pearl-clutchers want to close down.
If they were genuine climate activists they would debank just about everything
If BNZ are sincere then they must stop financing ICE vehicles, stop BNZ cards working at petrol stations, stop cards working on airlines or international travel, stop funding the construction industry, stop financing dairy.
Sincere about what? What are you on about. Sincerity doesn't come into it. They do not want to finance a business because they can see it poses a massive risk to their portfolio because gas stations rely on people moving around in 1 ton fossil fuel powered vehicles. That model is dead. The dinosaurs just don't realise it yet. The banks do.
If I decide to set up a business selling coal powered cars and BNZ refused to bankroll me will National and Fed Farmers come in to bat for me?
But the model is not dead. Not even remotely.
There is not a single electric truck in service anywhere I can see in Palmerston North.
A couple councils have some electric buses.
Kiwi Rail doesn’t have the money to electrify.
no electric boats or planes anywhere electric cars are still far expensive for at least 80% of the population.
US is about to go beards massively. Most Americans don’t want it.
Europe is bankrupting itself.
2030 is BNZ bro g political and trying to force the issue.
If they had said 2050 I might have been willing to give them a pass on this.
Plus didn’t we just learn our power infrastructure is not capable of handling the electrifying of our transport sector. I mean we just put out the last of wood and pulp industry which we really need because we can’t supply bough electricity for our current countries needs.
But change doesn't happen everywhere all at once, these things are incremental. And the change process is well underway, now that it is economic and more efficient to reduce emissions, people are doing it, regardless of the environmental benefits. Change happens over time and in steps, eventually EVs will reach critical mass, and then many (but not all) retail fuel outlets will be redundant.
Exactly right. It’s no different from insurance companies not wanting to insure houses on the edges of cliffs prone to erosion.
I have no problem with an insurance company independently assessing a property and then, with sound justification, refusing to insure it because it is at eminent risk of falling over. I do have a problem with an insurance company refusing to insure a property because they don't like the owner or their politics.
What the actual fuck are people going on about on this thread?
Fossil fuel cars are dead. Why would a bank lend to businesses that rely on a model that is dead? What next are Fed Farmers going to complain that banks will not lend to video shops?
Jesus Christ, some people are so caught up in their ideology they lose all fucking critical reasoning powers.
Fossil fuel cars and transport is not dead. Not even remotely.
There is not a single electric truck in service anywhere I can see in Palmerston North one of the country’s largest trucking industry hubs.
A couple councils have some electric buses.
Kiwi Rail doesn’t have the money to electrify.
no electric boats or planes anywhere electric cars are still far expensive for at least 80% of the population.
US is about to go beards massively. Most Americans don’t want it.
Europe is bankrupting itself.
2030 is BNZ being political and trying to force the issue.
If they had said 2050 I might have been willing to give them a pass on this.
Plus didn’t we just learn our power infrastructure is not capable of handling the electrifying of our transport sector. I mean we just put out the last of wood and pulp industry which we really need because we can’t supply bough electricity for our current countries needs.
Fossil fuel transport is going to be here for many decades to come.
If this is true then the worst case here is that BNZ will lose a significant amount of profit.
But that's their call, not yours, not the other randos on this thread that want to turn it into a political decision.
Its a business decision and a gamble for sure. It might be a stroke of genius or incredibly silly. But they have the right as a private business to decide the markets they want to operate in.
I'm sure if it is as profitable as people are making out, there will be no shortage of other banks lining up to take their place.
What are those curtain sides made of ? Hessian ?
We are so reliant on oil for so much. I dont believe electric cars/trucks will save anything. Sure on the daily they dont pump out CO. We need to go back to horses and Oxen for heavy loads to make a difference. As long as they dont fart.
A good start would be getting rail back to full speed and getting 50% of the trucks off the road, but the transport lobbyists wont want that.
The BNZ enjoy an extremely privileged position. They generate enormous profits for ther shareholders and are essentially too big to fail so are underwrittem by the tax-payer. They should focus on supporting New Zealand rather than virtue-signalling announcements such as this. Will they stop financing ICE vehicles, will they stop servicing the myriad of other users of petroleum including construction, agri, transport and fishing to name just a few? No, because there is no economy without fossil fuels for at least another 20 years.
Goldman Sachs just withdrew from the net zero banking alliance.
https://www.trademe.co.nz/a/motors/cars/electric/search?vehicle_conditi…
Target the private sellers. Those in trade usually won't settle without profit.
This one's a standout. Reserve met at just $788. I'd guess dealers are all over this one but one bidder calls themselves 'Farmer1641'. Range down to 80km though. (Note: Post 2018 models have far better battery management and the batteries last far longer. Not sure if 2018 battery management can be added when existing batteries are replaced. Anyone know?)
https://www.trademe.co.nz/a/motors/cars/nissan/leaf/listing/5060711238
Some of us don't have to worry about saving money and can drive whatever we want to. A leaf is not exactly a Porsche is it ? Not exactly a lot of driver engagement and fun there. Some of us just love driving, its more than just getting from A to B and trying to save money. Ultimately the big move in electric should probably be made for busses, they will be full of people that cannot drive a manual, sitting there like zombies getting pumped full of social media on their phones.
Everyone remember this when the banks start moaning that private credit has taken all their lending business. Fortunately private credit is in massive growth mode and it wont be long before banks find themselves begging for customers rather than picking and choosing them.
I agree, the banks have certain ESG targets (like many large corporates), not meeting them can lead to greater cost for their institutional borrowing. Also, Black rock and Vanguard etc won't buy and hold the banks shares if they fall foul of ESG targets, which essentially means the banks have to do it or face a significant shareprice drop.
“What do you say to mum and dad investors in petrol stations, who have invested their life savings for a means of income? You are saying you're defunding them with your cartel-buddies,” he said.
uhhhh, they already have established lending and businesses, and are mostly unaffected?
The Government’s own emissions reduction plan, released on Wednesday morning, set a target of having a network of 10,000 public electric vehicle charging stations by 2030.
New Zealand will likely have two million EVs on the road by the mid 2030s and will stop registering new combustion engine cars, although heavy vehicles may still require fuel.
Petrol stations will face a difficult transition during the next two decades and many may have to shut up shop as demand for fuel falls. BNZ simply doesn’t want to take on this risk.
To me the risk is not from climate change, it is from public investment crowding out private. Petrol stations are located in strategic locations around the country to meet the needs of motorists. If you wanted to roll out an EV charging network - all the locations have already been established, the forecourts for parking cars are already there, you just need to reconfigure them slightly. If you're on the road and need to charge, I don't see how this is different to the current petrol station/convenience store model, other than that customers will want to wait a bit longer as the charge isn't as fast as fuelling up. That's fine, you just make it a bit of a nicer place to hang about at.
other than that customers will want to wait a bit longer as the charge isn't as fast
I like your thinking. Also in the next couple of years we will see 800V architecture EVs able to charge from 10% to 80% in just twenty minutes. So that slightly longer wait isn't going to be nearly as long as today.
One of the cool things about EVs is that you can charge them overnight at home, so you essentially have a full tank every time you leave. These stations will really only be needed where people make longhaul trips away from home. So less overall but yeah they should be a much nicer experience.
Simple solution to all the climate change deniers that do not seem to be able to get their heads around this.
Go ahead and set up or invest in a company providing finance to petrol stations. You should also set up an insurance company that only insures properties that cannot get insurance because they are in a climate change impacted area (flooding, coastal erosion, sea level rise, hurricane, etc).
Easy money, go on, you'll make a killing.
By making a public statement about this they obviously see some positive PR in it.
Well there will be some who think this is a good thing and will look to do more business with the BNZ than otherwise.
There will also be some who think that this is not such a good thing and who will look to do less business with the BNZ than otherwise.
Cartel behaviour is getting together to control a market. Exiting a market is not Cartel behaviour. There is no commercial benefit or logical reason for the banks to all get together jointly leave a market. But they will all independently eventually arrive at the same conclusion based on commercial realities.
No conspiracy here I'm afraid just the commercial realities of sunset industries.
Its sunset in some respects. It will reduce, but it will never go to zero. eg Military, backup generators, boat motors/engines will be around for a very long time. Chainsaws being used in remote places. And just like the horse racing industry, there will be a lot of old cars which will continue to be used and raced. These are some examples that I can think of. There is quite a long list of these things.
I find this absolutely bonkers, there is so much benefit to the farming industry from decarbonisation, from marketing our products as value add (sustainability is highly valued these days) to having a higher budget for biological emissions. Fed farmers have let a fox into their henhouse by supporting fossil fuel.
If you can provide a practical, realistic and user friendly product like a tractor or combine harvester that isn't fossil fuel powered then perhaps, but there are real world issues to decarbonising farming that there are yet to be solutions to other than the ideology that it is good for the environment. Until these issues are addressed, it is all talk.
How ridiculously woke!
I hope that every petrol or diesel user votes with their feet and dumps the BNZ!
Any business that virtual signals like this with what is still an essential service that 97+% of the population rely on deserves being cancelled.
What's next? Stop lending to sheep and beef farmers because some vegan elites control the board of a bank? Stop lending to businesses using plastics? Stop lending to anyone who isn't planting native trees, growing hemp clothes and living in an earth sheltered passive house??
Corporates trying to exert control on the populace? The Greens must be salivating at this kind of nonsense.
NZ is 30 seconds from communism at this rate.
Let's defund the BNZ, I for one will be shopping to transfer my mortgage tomorrow morning!
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