'Get used to foreign investors'

Westpac's David McLean says banks have plenty of money to lend now. Photo / Greg Bowker

Don't blame the banks for our financial inertia, look to the board rooms and our lack of savings.

That is the message from David McLean, Westpac's general manager of wealth, insurance, private and institutional banking.

Having got some of the biggest property deals off the ground, like funding for the $1 billion Britomart and the $437 million Sylvia Park, McLean says market lassitude is caused by corporate caution and a non-saving culture.

"It's not that the banks are tight with money. We have more capacity to lend at the moment. It's the conservative approach being taken by 'Business New Zealand', and that's actually been very good for New Zealand. Businesses have been very conservative with their risk management through the worst financial crisis in the last 60 years.

"Not many businesses went under and that's a sign that our businesses are very good at risk management," he said.

But he wants people to distinguish between debt and equity, saying Sinlait and NZ Farming Systems needed equity not debt, "although those buyers will probably put some debt into the business".

" Our equity markets are a bit sick, globally. Where is equity coming from? Asia because that's part of the world that has survived pretty well," he said.

"Get used to foreign investors. We haven't got the money to put up ourselves because we haven't saved it. You can't begrudge other investors coming in. This becomes a self-perpetuating downward spiral. Companies don't see their shares being valued at a premium.

"Why? Because there's not a lot of money going into the market. So equity markets don't go up.

"Therefore people can't raise capital there. It's all a symptom of the fact we don't have much flow of funds into superannuation.

Mr McLean said businesses did not see NZX as a place to raise money because they were not going to get a rising share price or attractive yields.

"Most shares here trade below net tangible asset backing so you're not getting premiums and it's an expensive way to raise money," he said.

"Equity markets are quiet and all but closed down.

"It's a symptom of the global environment and also of New Zealanders not saving in the right way.

"They've saved in an unproductive investment like property. What we need is to be saving in retirement superannuation funds or shares.

"That then gets invested in the stock market. Companies want to expand and invest and there's money there in the form of a hugely thriving stock market.

"How could this be achieved? Compulsory superannuation. We've got to take it seriously. I was always against it because I thought people should make up their own minds.

"But actually for some things, people have to be saved from themselves - smoking, seatbelts. It's human nature.

"We are hopeless, we want instant gratification and rather than save, we will buy the new iPod or the new TV."

He said market stagnation would change "if we changed ourselves".