Aussie banks continue to post record profits (and send them offshore)

Record bank profitability and subsequent dividend payments offshore highlights an on-going structural weakness in our economy, said Green Party Co-leader Dr Russel Norman today.

Dr Norman was responding to the posting of strong half-year profit results from ANZ National, BNZ, and Westpac banks this week.

“For the last reported financial year, these three banks alone sent $1.8 billion out of the country in the form of dividend payments back to their parent banks in Australia,” said Dr Russel Norman.

“This capital out-flow is unsustainable in the longer term for New Zealand Inc. and highlights the urgent need for greater competition in the banking sector, and greater local ownership of our banks.

“Only one bank — Kiwibank — approaches anything like a suitable rival to the big four Australian banks, but it controls just 2.5% of total banking assets compared to 90% controlled by the Australian-owned banks.

“It’s not in New Zealand’s economic interests to remain a wholly-owned subsidiary of the Australian banks,” Dr Norman said.

The 2009 Parliamentary Inquiry into Banking found that New Zealand does not have a competitive banking sector. This lack of competition was found to have cost businesses and mortgage holders up to $2 billion of additional interest rate expenses at the time.

“The Government needs to invest further into Kiwibank to bring it up to the point where it can compete effectively with the big four Australian-owned banks,” said Dr Norman.