In the 1980s and early 90s the wisdom of the day dictated that our small (in a global sense) New Zealand owned banks were unsustainable. We lost the BNZ to the National Australia Bank group and our Trust Banks to Westpac. All 600 PostBank branches around the country were closed down by 1988. The consequences of those decisions saw huge profits and dividends head across the ditch, contributed to our huge Current Account deficit and allowed the Australian banks to become the most profitable in the world at a time when many were being bailed out.
These same banks have shown their gratitude by maximizing their profits through dubious means and paying local CEOs excessive salaries. Inland Revenue managed to claw back billions of avoided tax through legal action and exorbitant default fees (that have cost New Zealanders about $1 billion) are being challenged through a class action.
Russel Norman revealed an unhealthy relationship between our Reserve Bank and Westpac (the Government’s sole banker) when the Reserve Bank Governor was caught out attempting to play down Westpac’s profits to smooth through an ongoing relationship that hadn’t been tendered for.
Ongoing pressure from the Greens has finally seen both the Reserve Bank and the Ministry for Business, Innovation and Employment agree that the Government’s master banker should be decided by a fairly tendered process.
Russel Norman was pleased with this decision because, “Ideally, our Government’s banking should be done by a New Zealand bank. This now becomes a possibility.”
Banks should be supporting our economy but over the last twenty years the Aussie ‘big four’ have been sucking it dry. It’s about time we restored some real competition and brought more of our banking home!