Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Reserve Bank must regulate banks, not be their champion

9 November 2012

Reserve Bank must regulate banks, not be their champion

New Zealand’s foreign-owned banks are some of the most profitable in the world, the Green Party said today.

Parliamentary Library research shows that the big four Australian-owned banks – ANZ National, BNZ, ASB, and Westpac – are amongst the most profitable banks in the world and this differs from Reserve Bank advice to Parliament this week that said that our foreign-owned banks’ return on assets was ‘about average’ among developed nations.

“Earlier this year, the Bank for International Settlements found that Australia's big four banks were the most profitable in the developed world for 2010 and 2011 and record results this year suggests that picture is unlikely to be any different,” said Dr Russel Norman.

“In 2011, the big four Australian banks made a pre-tax return of 1.19 percent on assets compared with a global average of 0.36 percent.

“Our Australian-owned banks are actually some of the most profitable in the world, contrary to advice recently given to Parliament by the Reserve Bank Governor.

“When you make the comparison of the profitability of our banks with the rest of our economy, it’s very clear our banks are making excessive profits to the detriment of jobs and incomes.

“Our big four Australian banks made average before tax returns on equity of 20.9 percent in 2011. This compares to a before tax return of 6.6 percent across all industries in New Zealand.”

Return on assets is a good measure to compare bank performance with other banks. Return on equity is the best measure to compare bank performance with other industries.

“Our former Reserve Bank Governor said excess bank profits were the price we had to pay for a stable banking industry,” said Dr Norman.

“I’m concerned that our new Governor has adopted this same complacent mantra leaving our banks to make excess profits to the detriment of the rest of the economy.”

Excessive bank profits act as a drag on the wider economy raising the cost of borrowing for productive enterprises, farmers, and home owners. Dr Norman also denied that excess profits were a sign of a strong banking sector.

“Lehman Brothers, Merrill Lynch, Royal Bank of Scotland, HBOS, and Bear Stearns were returning anything from 19–26 percent return on equity in the year before they collapsed requiring massive tax-payer bail-outs and sending the world’s economy into deep recession,” Dr Norman said.

“We can’t afford to have a complacent bank regulator that looks at excessive bank profits and then looks away.”
ends

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell:
On Andrew Little’s Debut, Mockingjay, And Drunk Texting

John Key’s credibility has taken a hammering this week – at least among the 50% of the electorate who have always had doubts about him on that score.

The other substantial story of the week has been about Andrew Little’s debut as Labour leader, which has received top marks, especially among the 25% of the electorate still voting Labour. According to some reports, the Labour caucus has been ‘in seventh heaven’ about Little’s success this week in taking it to the government in the House. More>>

ALSO:

 
 

Parliament Today:

Gordon Campbell: On Government Arrogance

Right now, National is ramming anti-terrorism measures through Parliament. This legislation will grant the SIS the power to carry out 48 hour bouts of surveillance on anyone without a warrant, and will bestow on government the power to unilaterally revoke anyone’s passports and thus deny them the freedom to travel. More>>

ALSO:

Glenn Inquiry: Report Offers Solutions To Family Violence

The People’s Blueprint unveiled today by Sir Owen Glenn’s independent inquiry into child abuse and domestic violence outlines a new, more cohesive and effective system for reducing New Zealand’s alarmingly high family violence rates. More>>

ALSO:

Environment Commissioner: Changing Climate And Rising Seas - Understanding The Science

A rising sea will be with us for a long time to come – one way or another we will have to adapt. But how high and how fast the water rises will be influenced by the speed at which the world – including New Zealand – reduces greenhouse gas emissions over the coming decades. More>>

ALSO:

Key Texts With Whale Oil Released: PM Can’t Be Trusted Over Dirty Politics Defence - Greens

John Key’s answers to questions about dirty politics can’t be trusted, after he was forced to admit that he had misled journalists and Parliament about contact with attack blogger Cameron Slater, said the Green Party today.. More>>

ALSO:

Temporary Release Crackdown Continues: Corrections Review Of Phillip Smith Case

“The review by Corrections’ Chief Custodial Officer reveals that the plan for Smith’s series of temporary releases was overly ambitious and misinformed. He’s a highly manipulative and deceptive person who although technically eligible, should not have been considered for temporary release." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news