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.”

© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines



Gordon Campbell: On John Key’s Trip To Iraq

In the embedded press coverage on this trip, the absence so far of any evaluation of the wider context of what New Zealand thinks it is doing at Camp Taji has been striking. More>>


Labour: Parata Puts Brakes On Charter School Appraisal

“When the Ministry of Education recommended they compare the achievements of children at charter schools to those of their counterparts at state schools, the documents show Hekia Parata specifically prohibited them from doing so." More>>


Bad Day For Universities: Gun, Bomb Threats On Three Campuses

Dunedin Police are continuing their investigation into the threat made against the University of Otago. Staff are following a number of lines of inquiry, and police are working to verify the authenticity and source of the post. More>>


Gordon Campbell: On The TPP Deal Reached In Atlanta

Yes, the TPP has helped to knock a few points off the tariffs facing our exporters. Yet some of those alleged dollar gains may well have been made regardless over time – and without the negative baggage of the concessions in the non-trade areas (intellectual property, copyright extensions, investor-state dispute mechanisms etc) that the TPP deal also brings in its wake. More>> (Cartoon by Dave Wolland)

Public Summaries:


Wellington.Scoop: Serco – First The Prisons, And Now It Wants To Run The Trains

As the government continues its inquiry into Serco’s discredited administration of Mt Eden prison in Auckland, here in Wellington there’s further scrutiny of the British outsourcing company – because it’s competing to take over the running of our commuter trains. More>>


Pre-Signing: Gordon Campbell On The TPP Countdown

To date, the Key government has been unwilling to share any information about this TPP deal until it is too late for outraged public opinion to affect the outcome... the disclosure process is likely to consist of a similarly skewed and careful exercise in spin. More>>


Australia Deportations: English Relaxed On Immigration Centre Conditions

Labour's Annette King: “There have been numerous reports from inside these detention centres on just how bad conditions are... If they were being held in any other foreign jail, I imagine Mr English would be somewhat concerned. More>>


Schools: Achievement-Based Funding Would Be A Disaster

The Education Minister’s speech to the PPTA Conference raising the spectre of achievement data driving a new funding system would be disastrous, says NZEI Te Riu Roa. More>>

  • Video Out-Link - PPTA Annual Conference 2015 on Livestream (Q+A dicussion suggests funding would be directed to less successful schools.)

  • ALSO:

    ECE Report:

    Get More From Scoop



    Search Scoop  
    Powered by Vodafone
    NZ independent news