Labour to keep watch Aussie banking inquiry
An inquiry launched in Australia to investigate banking competition and fees following record profits by major lenders will be closely monitored on this side of the Tasman, says Labour's finance spokesman David Cunliffe.
The inquiry was launched with unanimous backing from Australia's upper house senate and will involve banks which control the bulk of New Zealand's retail banking through their outlets here.
Mr Cunliffe last year spearheaded a similar parliamentary inquiry here with the support of opposition parties following concerns about the behaviour of the big banks here.
The Australian-owned banks which were targeted snubbed requests to take part in the inquiry, but Mr Cunliffe said the scrutiny appeared to have got their attention.
"Last year there was strong evidence that banks weren't passing through cuts in the official cash rate from the year before, and the Labour-led parliamentary banking inquiry coincided with banks correcting that behaviour," he told NZPA.
"We believe it was effective, we had a good number of submissions to it and a pretty thorough report with professional advice."
The Australian inquiry is broader-based and also involves looking at regulatory structures.
Mr Cunliffe said banks there had bought up distressed finance companies and moved to reinforce their competitive positions, and that was sparking concerns about the situation leading to dominance in the financial markets.
There could be a similar issue here where markets became more reliant on the main trading banks, he said.
"We are going to need to be vigilant in New Zealand that we don't have similar problems."
He said while ANZ's recently announced annual profit in New Zealand appeared high at $882 million -- a 40 percent increase on the previous year -- there were various anomalies involved, as there were with BNZ's 1.4 percent cash earnings increase, and it was too early to tell whether a pattern of high profits would emerge across the spectrum of banks.
Reserve Bank statistics showed after-tax profits had returned to pre-recession levels as of the end of last year, and any further increases would appear likely to take earnings above historical profit levels, Mr Cunliffe said.
"There is nothing wrong with making a profit, but then you have to start asking why is that, and are consumers getting a fair deal."
AAP reported that the Australian inquiry would look at bank fees and charges, competition between banks and non-bank lenders, the ease of moving between banks for customers, hurdles to new bank services providers and assessment of claims by banks on cost of capital.
Independent Senator Nick Xenophon, who is spearheading it, has promised to put the banks under the microscope to an extent not seen in years.
Mr Cunliffe said the Australian inquiry would be closely monitored by Labour.