The chief executives of New Zealand’s retail banks will face scrutiny from a joint session of Parliament’s finance and primary production select committees, starting next week.
ANZ New Zealand boss, and reluctant capital gains tax advocate Antonia Watson, will take the first turn in the hot seat on Wednesday the 23rd of October.
Rabobank, ASB, Westpac NZ, BNZ, TSB, Kiwibank, the Co-operative Bank and SBS Bank are also scheduled to appear at hearings spread out over the next month.
The terms of reference include the price of banking services, profitability of the sector, barriers to competition, the role of regulations, and whether rural customers are treated fairly.
It follows a Commerce Commission probe into competition for personal banking services, which found the sector had congealed into a “stable oligopoly” with limited investment and high profitability.
There is also a populist aspect to the inquiry. New Zealanders have been paying high mortgage rates, due to monetary policy settings, which has made banks unpopular.
A Consumer NZ survey from May 2023 found nearly 40% of respondents didn’t trust their banks, and a more recent one found customer satisfaction scores ranged between 54% and 66%.
The Finance and Expenditure Committee said it had received more than 140 written submissions on its banking inquiry and more than 60 submitters have asked to speak at a hearing.
It aims to hear all these submissions before the end of the year and will set a date for its report once they are completed, and may ask for further targeted submissions on specific issues.
Coalition of competition
Conducting a probe into the banking sector was part of the coalition agreement between National and New Zealand First.
However, the Primary Production Committee, which is chaired by an Act Party MP, attempted to get ahead of this inquiry and opened its own “briefing” into rural bank lending in February. The Finance and Expenditure Committee's chaired by National's Stuart Smith.
Finance Minister Nicola Willis ultimately instructed the Finance and Expenditure Committee to take the lead on the inquiry but incorporate the rural angle and committee members.
This received a lukewarm response from Primary Production chair Mark Cameron and Federated Farmers, who worried MPs with rural experience wouldn’t get to grill the banks.
On Thursday, the Finance and Expenditure Committee invited the Primary Production Committee members to attend all the hearings and promised to hold one session focused solely on rural communities and agriculture.
Cameron said in a press release he was “very glad to now say” the inquiry would have a particular focus on rural banking and include his committee members as full participants.
“In short, farmers will be well-represented as we unpack whether rural New Zealand is getting a fair deal on banking services.
7 Comments
It baffles me why so many Kiwis hate their banks. The major banks pay a huge amount in NZ tax. And during the 2008 financial crisis, we never had to worry that our banks would go under, resulting in people losing their savings. That was a real concern in other countries. The banks here are well managed.
Do you see the banks as some sort of mythical idol that is deserving of praise? The 2008 financial crisis was largely a North Atlantic Financial Crisis, how exposed to sub-prime lending do you think BNZ was? Due to the swift actions of our banks, mortgage holders were able to avoid defaulting on their obligations?
If the banks paid less tax (made less of a profit) then wouldn't you see that tax burden being carried by other smaller businesses, when mortgage holders have greater discretionary spending and those smaller businesses pay tax on their profits?
Given that the banks love how the RBNZ has conducted themselves under their current leadership to make banks even more dominant & profitable in NZ, I think we can be assured the RBNZ get's a free pass.
But the RBNZ has secured a few wins for NZ Inc. under their current leadership. This must not be forgotten.
We'll know soon who is actually working for NZ Inc. in banking quite soon.
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