Stand Alone National Bank or Propping Up ANZ?

The Reserve Bank's stand alone condition of approval on the sale of National Bank to ANZ looks like making the best of a bad situation says ACT Associate Commerce Spokesman Stephen Franks.

"Finance Minister Dr Michael Cullen has now lost his best chance of getting Australia to remove its rule that denies equal treatment to New Zealanders in the event of an Australian bank failure. Section 13A of Australia's Banking Act says Australian depositors must be paid first. The New Zealand Reserve Bank has in the past called this a 'predatory national regulatory practice'. It is completely against the spirit and requirements of a genuine CER relationship. The Government never had a better bargaining chip to support the Reserve Bank's efforts to ensure this law was removed or at least extended to cover New Zealanders.

"Dr Cullen is a lion in New Zealand but turns into a lamb in Australia. It seems he's had to promise to facilitate Australian control of Air New Zealand, and now the National Bank. How much more will it cost us to make up for the Prime Minister's offence to Australia, like reneging on defence commitments and our weak immigration policy, which Australia sees as their 'flapping back door'?

"The Reserve Bank's technical conditions look tough. But they rely on Australian bosses respecting them. They won't work if the Reserve Bank can be heavied by the Government, or the Banks, to not make a fuss over creeping non-compliance or relaxation. The Finance Minister hasn't supported the Reserve Bank when it had the best shot of protecting New Zealanders against becoming Australia's second mortgagees. So what use will these conditions be when ANZ gets the Australian government to lean on New Zealand whenever an approval has to be given under the conditions?

"All the technical restrictions in the world could prove useless in the final frenzied days of a business crisis. They can't prevent ANZ decisions in Sydney or Melbourne to simply not pay internal debts to their New Zealand operations, while still collecting New Zealand payments.

"When Dr Cullen amended the Reserve Bank Act earlier this year he should have included US style sequestration provisions, allowing the interception of NZ payments to Australia until Australia released what was due to New Zealand. The Reserve Bank's stand alone conditions may be designed just to soothe, until New Zealanders have got used to the idea of having their entire banking industry dominated by Australia. In that case they'll work for their intended purpose but do nothing to protect against Australia's predatory banking law," Mr Franks said.

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