A law proposed by New Zealand First would require banks to lend to fossil-fuel sectors and could imprison employees for denying loans on environmental or governance grounds.
The Financial Markets Amendment Bill aims to prevent financial institutions from refusing services based on political views, ESG (environmental, social and governance) considerations, or industry type. But it doesn’t define what commercial reasons are valid and may conflict with other existing regulations.
Banks would only be allowed to deny a loan if they could demonstrate a "valid and verifiable commercial reason” and individual employees could be fined or imprisoned for breaching the law.
The Bill aims to address complaints from farmers, petrol station operators, and fossil-fuel companies who argue that bank climate policies are limiting access to financing. This has frustrated the Government, which wants to grow the mining, oil exploration, and agriculture sectors.
The loosely drafted Member’s Bill must either be drawn from the ballot or be supported by the Government for a vote. It’s unlikely to be debated seriously and may serve mostly as a warning to banks.
NZ First MP Shane Jones said he would consider proposing a law change after learning that BNZ planned to stop providing banking services to a coal mine by 2030. Parliament’s banking inquiry also revealed the bank was exiting petrol station lending that same year.
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Last week, Prime Minister Christopher Luxon told Newstalk ZB that all three coalition parties were in lockstep on bank lending and that he wanted top executives recalled to the banking inquiry for further questioning.
Cameron Brewer, newly-appointed Chairman of the Finance and Expenditure Committee, said he would discuss making this happen with his colleagues on the committee.
"It's fair to say that frustration is palpable from the Prime Minister and Finance Minister down, and so there certainly is some political appetite to get the big bank CEOs and Chairs before the Committee again,” he told Interest.co.nz.
Federated Farmers are also expected to present their concerns about the impacts of the Net Zero Banking Alliance, which they believe has caused the debanking of rural petrol stations.
“Sadly, this is not some academic argument. There are genuine concerns that legitimate and essential businesses to our economy and social fabric could struggle to access bank lending and transactional support,” Brewer said.
“Their policies and practices deserve full scrutiny, and so as the new chair I would like to at least see the four big banks back before the Committee, but I'll test that with my colleagues when Parliament resumes”.
Luxon hasn't endorsed NZ First’s lending law but told Newstalk ZB he was “open to looking at whatever we need to do” and that banks shouldn’t decide what sectors deserved financing.
“Their job is to finance the things that New Zealanders need. These are legitimate businesses. If you don't want to finance a mining company, well, we need critical minerals to actually make the transition to clean energy and we want economic growth,” he said.
The Finance and Expenditure Committee resumes its banking hearings on Wednesday with submissions from Simplicity and the Banking Reform Coalition.
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To have a bank account is fundamental, for every person and every legal entity, to be able to participate in society. I'm not sure the NZ First bill is clear on this: it focuses exclusively on companies and seems silent on the rights of societies and individuals.
As M0ralHazard argues below, the answer is for the Reserve Bank to be the 'bank of last resort' and offer a basic bank account to all who are spurned by private banks (or who wish to spurn private banks).
Here is a Netherlands view: A company can, under certain circumstances, force a bank to enter into a banking relationship. However, the relationship between the company and the bank is likely to be limited to the use of a bank account and will not include additional services (granting credit, depositing cash).
https://www.lexology.com/library/detail.aspx?g=0aee8ff0-a1de-4d24-8308-…
Perhaps bankers are concerned about the future of civilisation? Total collapse of climate stability, large dead zones around the hottest parts of the planet? Their kids living in a depleted, polluted wasteland?
If I were a banker, I would tell the coal industry to f off as well, along with morons like Jones and Luxon!
One term government!
What if all the banks decided to deny a person a mortgage because they work for an oil/petrol company, or any other company they deem unsuitable? Does a person have a right to be treated the same as every other borrower and not denied a mortgage because of who they work for? Its the same thing, just on a company level.
But this isn't about lending to a person, it's about lending to a business. And it isn't because they disapprove of the business activity, it is because they see risk in lending to that business. So not relevant at all.
Is there any culture war narratives you don't get sucked into?
There is risk in all lending. I dont see the banks defunding all property developers as an example. The BNZ blanket refusal to lend has nothing to do wih risk, as its a blanket ban, not an individual assessment of a borrowers ability to pay. If a company with billions of dollars in assets wants to borrow $1M to buy a petrol station, thats not a risky loan. It is a ban on the business activity. Petrol is not going away in the next 5 years, or even 10 - so thats plenty of time for a petrol station owner to pay back the loan. Plus the land itself is security for the loan. Again, not risky. As better informed people in Australia have said - "its considered stable and defensive".
The Market doesn't sort anything though does it. It spits out the propaganda, hype, ideology and virtue signalling everywhere, and has the deepest pockets to defend its tactics.
The Market/big business was never meant to have unfettered power.
The Government will have to be involved somewhere in the transition process for the benefit of the people. The Market couldn't care less about the actual real world issues.
after learning that BNZ planned to stop providing banking services to a coal mine by 2030
No, not just lending, based on the above. First BNZ came for Gloriavale, and we did nothing (First They Came - Wikipedia).
MH has a very valid point; citizens/residents need an option available to them for when the banks deny services for whatever reason. I don't care if people/businesses cannot borrow though.
So those who rail against woke are against diversity, equity and inclusion?
Which in particular? Do they think diversity is a curse and we should all force ourselves into the same mould?
Is it equity, and anyone who gets a shit start to life should just accept their fate?
Or is it inclusion and anyone who didn't closely fit the mould or isn't physically able to operate like the majority should be excluded from society?
Wokeness is whatever the ignoramus using the term wants it to be. That's the point. You think these people understand what the term cultrual Marxism would even mean or imply?
Using it towards a bank, one of the most fundamental pillars of capitalism and ruthless wealth extraction, sums it up.
Dunno why to be honest. Wouldn't they be perfectly positioned to put in place an ev charging network + hospitality on the go? Similar to the current model but with EVs? Rapid DC charging currently can be done in 15 minutes. Hard to imagine this won't be down to current petrol refueling times in a decade or two.
How many petrol stations are there these days that just sell petrol and nothing else? How many also have convenience stores, fast food franchises, cafes, and takeaways? If the petrol pumps disappeared, what other use could the land be put to - a supermarket, an apartment block, office space, car parking, more retail. At the end of the day, a petrol station is simply prime land available for commercial or residential development. So lending to them should be treated the same as all other lending for land.
All these corporates are now having to report on sustainability, carbon emissions etc. That is where you need to start if you want to change this.
Insurance companies are next. They already have customers that are not green enough. As the insurers need to improve what they report metrics wise then those companies will get the chop. Insurers aiming for net zero are going to drop the same customers.
Focusing on banks will not achieve a good long-term outcome.
This is low-level reporting, Dan.
Luxon is making ignorant statements, unchallenged here.
'Their job is to finance the things that New Zealanders need. These are legitimate businesses. If you don't want to finance a mining company, well, we need critical minerals to actually make the transition to clean energy and we want economic growth,” he said.'
No, it isn't. A bank is obliged to maximise return to its shareholders. As are all Boards. And it is arguably stupid to decide to kill off our species, in a blind charge to amass, what? Amass more digits in a - wait for it - bank computer. Oh, the irony...
Luxon cannot have GROWTH on the remaining fossil energy, nor can humanity globally. Entropy is cutting the remainder all the time, and peak all-liquids is looking more and more like 2018 (100,000,000 BPD) and we're down to 97 already - plus that growing entropy demand. And renewables - aside from his two-facedness which the media should have challenged; he's actually stomping renewables - wont go even close to displacing fossil.
Journalism would have read that, understood, and pointed out that he cannot have bot renewables and GROWTH, certainly not from this overshot point. Actually, that neither can he have Growth using the LAST HALF of the fossil resource - which is what the headline is about; forcing people to extract the last half (who sponsors such nonsense, and is anyone tracing that linkage?).
And given the legacy being handed to our children and theirs - did you read Gwynne Dyer today? - some mention of defrauding might also be appropriate... Just saying.
"we want economic growth"
Ah, the royal we. Well no one asked me and I don't want exponential "economic growth" . The mantra of yeast. I prefer to think for myself on this one.
Jones and Luxon haven't the intellect between them to comprehend the hole they're digging will bury everyone, including their spawn!
We are not amused!
Debt expects to be repaid.
That requires future work to be done.
Future work requires future energy.
And don't make the mistake of thinking human labour equates to the energy in a litre., or a barrel, of oil. Human energy is mere noise.
So the only way debt gets a return from here on, is via inflation, or via competition with other debt for the future remaining energy. Which is why wars over oil.
Get used to it.
As the EROEI descents and the entropy increases, more and more won't be able to wash their faces.
https://surplusenergyeconomics.wordpress.com/
'Decision-makers believe, or at least hope, that these processes can be reversed using the twin tools of monetary stimulus and technological advance. But this cannot work. The potential scope of technology is bounded by the laws of physics. Money has value only as an exercisable “claim” on the output of the “real” economy of material products and services. The link between the material and the monetary doesn’t – and can’t – work in reverse.'
Ever see that articulated by a 'bona fide' journalist in this country?
Me either. Yet if that is the truth?
I see it is getting a head of a potential problem that hasn’t fully hit our shores yet.
there have been countless examples now in the US, UK and Canada being debanked for views that don’t align with the politically correct view of the time.
the onus should be on the banks to prove it really is for commercial risk reasons and not because the don’t doesn’t like the persons view on something.
Why don't they just let the markets do their thing. If there is untold wealth in mining as per Shane Jones position why aren't the banks queueing up to make massive profits?
Because they are woke? Pull the other one.
Justifying a massive taxpayer subsidy is exactly what this is all about. This part of the game is called framing. Now, instead of talking about the merits of whether taxpayers should also fund the destruction of their own country and planet to ship natural resources off-shore and concentrate more wealth in the already super-rich we are talking about technicalities of how to do it, i.e. force the banks to do it or make Kiwibank do it. This is why the PR firms get paid the big bucks. Smoke and mirrors at its finest.
Great post - same with the myopic focus on Trump.
We are witnessing the fight to see who is going to get into the lifeboats - just that nobody has reported we're sinking.
Trump and Musk - and this coalition - are hell-bent on quashing democracy and rights, on behalf of an ever-decreasing cohort. It is a temporary position; without the buying masses, there is no elite, no finance, no growth, no banks, no markers.
Then they will find their 'skills' - note Luxon wants folk with digits, not skills - are not even skills.
I'd suggest that the Inquiry commission an objective report on the pros and cons of a windfall tax on banks. Reasons for doing so include that banks in NZ generate the second highest rate of profit in the world and that a significant proportion of their profits have arisen from Government led increases in interest rates, not from their own business skills.
This is some of the most hokum garbage I've heard from this coalition, which is admittedly a low bar. Banks are free to lend to who they like, is that not their shareholder driven function. That they don't want to lend to these industries surely indicates that there is no money to be made.
And when has giving a damn for the environment been woke?
It's not woke re the environment and climate change.
Banks may provide short term loans but they are in the game for profit. Re the long term it seems to me they are just following good science from reputable sources e.g. piks-potsdam and Nature...
https://www.pik-potsdam.de/en/news/latest-news/38-trillion-dollars-in-d…
Even that most conservative of professions, Actuaries, whose job it is to accurately assess and manage risk for their employers and clients in Banking & Insurance, are publically calling out the risk in a recent UK report.
https://actuaries.org.uk/planetary-solvency
Banks are just identifying the road in front of us, risk affected industries and businesses, and adjusting their loan policy to suit. As any 'good' government should do, develop policy to manage/mitigate future risks. Not policy to deny or introduce/exacerbate further risk!
Note: Since I last read the Nature report there has been a challenge of its methodolgy. A quick AI search reveals the challenge is coming from affected industries and their political affiliates ! No doubt including fossil fuel. I'd be very surprised if that isn't led by Atlas Network connected 'think' tanks. It's straight from their playbook, i.e. Project 2025 and Trump's troop trying to control the narrative, purging any mention of climate change from their govt websites. To be followed by the staff and scientists that wrote them i suspect!
Lending to someone buying a petrol station should be considered the same as lending to someone buying land. Because that is what they are buying. Whether there is a petrol station operating on the land or its turned into a block of apartments or a supermarket, its still land.
Which is exactly why there is an ASX listed real estate trust in Australia that buys up petrol stations. And in Australia petrol stations are seen as "stable and defensive"
Dexus Convenience Retail REIT: The quieter start to the earnings season allowed us to look a little off Broadway at a company that doesn’t usually come across our radar: petrol station owner Dexus Convenience Retail REIT. One thing that caught our eye is the number of transactions in the sector; although office property deals are few and far between, petrol station property deals are comfortably back to pre-COVID-19 levels. The Dexus vehicle has helped drive this; after selling 13 assets from 2022 to 2024, it’s sold nine in the past six months, as it gets out of regional properties in Queensland to focus more on highway and metropolitan stations. It’s interesting to see what’s driving the deals. Yes, the current tenants are viewed as stable and defensive. But Dexus says buyers are taking a position on the underlying land value of petrol stations in metro areas, given land is scarce and the housing shortage isn’t going away.
Easy solution KW, you and all the anti-wokesters can set up a bank and lend to all these unwoke businesses, you'll make a killing.
Why not also get into the insurance game and agree to underwrite all the properties that the woke insurance companies don't want to insure.
No need for the govt to get involved, what are we a nanny state?
Don't need to set anything up. Its already happening. Banks will soon find themselves disintermediated, and they will only have themselves to blame. What will happen to banks when all they have left is residential mortgages (and even that assumes that private credit wont get into the mortgage business as well via securitisation).
The provision of private credit is booming in the US, as it is in Australia, driven by an increasing reluctance among banks to lend to riskier prospects. That has been driven by internal changes after the global financial crisis, and by regulators who have tightened lending standards.
Global private credit assets under management quadrupled over a decade to reach $US2.1 trillion ($3.4 trillion) in 2023. According to the International Monetary Fund, private credit is now the same size as the high-yield bond and leveraged loan markets. BlackRock has previously suggested that the private credit market could reach $US3.5 trillion in 2028.
I've been pointing out here - for years - that the Limits to Growth would limit the 'investment' opportunities. More accurately, the ability to 'profit' - which an expectation to consume more. In the face of less, more consumption becomes a riskier bet.
Simple - but apparently not simple enough for some...
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