Ban Sale of National Bank to Australia

Thursday 14 Aug 2003
Stephen Franks
Press Releases -- Commerce

The Government must stop any sale of the National Bank to Australia until their law treats New Zealanders equally with Aussies in the event of a bank collapse, ACT New Zealand Associate Commerce Spokesman Stephen Franks said today.

"New Zealand is already woefully over exposed to Australian financial sentiment. The possibility of conspiracy to profiteer in New Zealand, by head offices in Sydney and Melbourne, gets worse when the main non-Australian bank (National) falls into their hands. Ordinarily, ACT would say this is for competition law to deal with.

"But there's a more serious risk that only Government action can address. Australia's Banking Act says Australian depositors must be paid first if an Australian bank collapses. Even where they have a New Zealand-registered subsidiary, treasury functions and computer systems centralised in Australia could make it impossible to stop any loose cash in the New Zealand arm from ending up in Australia as disaster looms.

"The answer is simple. The Government should announce immediately that no Aussie bank will get a further look at the National Bank until Australia does one of two things: repeals section 13A of its Banking Act, or extends it to cover New Zealanders so we share whatever's left equally with Australians.

"The Reserve Bank Amendment Bill going through its last stages this afternoon should have had extra powers. Our Reserve Bank should be able to freeze Australian assets in New Zealand until it is clear that Kiwi depositors will be treated fairly and on an equal footing with Australian depositors. Such a weapon would be used only if Australia denied New Zealand a place at the negotiating table when a major trans-national bank failure was being sorted.

"The Government has known for years about the concentrated risk presented by Australia's law, and has tried to pretend it wasn't serious. I called for action on July 6 2001, after the Reserve Bank's Deputy Governor revealed he was worried about it. He acknowledged our exposure to the potential for Australian ruthlessness, referring to such rules as `predatory national regulatory practices'. He noted that both the US and Australia have them. Britain, where the National Bank is presently owned, does not.

"Today's Amendment Bill says the Reserve Bank could refuse registration because of Australia's section 13A. Unfortunately for New Zealanders, the Government has such a frosty relationship with Australia - after reneging on immigration and defence obligations - it has not dared tell the Reserve Bank it will be backed up if it tries to use the power.

"I am calling on Finance Minister Dr Michael Cullen to act in New Zealanders' interests for a change. Tell the Aussie banks `transaction declined' until they give us some security. They must get their government to make the playing field level for New Zealanders if they want to profit more from us," Mr Franks said.

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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