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

 

Departure Speech: Governor-General’s State Farewell Luncheon

"...Unfortunately I was unable to get to the Antarctic, the Chatham Islands and the Kermadecs. A dicky heart thwarted our travel to the Antarctic; and even though I volunteered to parachute into the Kermadecs to join the Young Blake expedition, time, commitments and officials frustrated my plans to visit the Kermadecs and Chathams." More>>

ALSO:

New Research: Most Homeless People Working Or Studying

“The cost of housing has been rising without corresponding increases in income, whilst the number of state houses per capita has been in decline. Many low-income people are missing out on housing, whether we recognise them as ‘homeless’ or not. More>>

ALSO:

Post-Traynor: New Offender Info Sharing Plan

“This Bill delivers on that step-change by moving away from name-based records held by individual agencies to a shared, anchor identity based on unalterable information, such as fingerprints and facial recognition. It also gives agencies access to the drivers’ licence photo database and birth, death and marriages information." More>>

  • NZ Law Foundation - New $2M fund for research on information challenges
  • Littoral: New Ship To Deliver Enhanced Naval Capability

    Defence Minister Gerry Brownlee says the Government has approved a Ministry of Defence and New Zealand Defence Force recommendation to request tenders for a new naval ship to support littoral operations. More>>

    July:

    After King's Labour Snub: Māori Party And Kiingitanga To Work Together

    Māori Party Co-leaders Te Ururoa Flavell and Marama Fox met with Kiingitanga representatives in Wellington yesterday to discuss working together on key issues for the betterment of Māori. More>>

    ALSO:

    Waitangi Claim On Rehabilitation: The 'Justus' System For Māori Not Good Enough

    Closing statements at the Waitangi Tribunal case against Corrections called for immediate steps and a comprehensive review to address the high rate of Māori reoffending. More>>

    ALSO:

    Advice: PM Sets Rules For Ministers' Treatment Of Public Servants

    Prime Minister John Key has laid down the law about the way ministers and public servants should interact, saying ministers may not always like the advice they receive, but they must listen to it carefully, respectfully and professionally. More>>

    Gordon Campbell: On The Funding Changes In Special Needs Education, And Uber

    The plan to strip out the educational support for older “special needs” children in order to meet the existing shortfall in funding for special needs in early childhood education is so miserly and relentlessly stupid as to defy belief… More>>

    SPECIAL EDUCATION (& More):

    Online Learning Plans:

    Get More From Scoop

     

    LATEST HEADLINES

     
     
     
     
     
     
     
     
     
    Parliament
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news