Nats want Australia and NZ to share banking regulator

By GARETH VAUGHAN


The National Party and its finance spokesman John Key will today call for a transtasman banking regulator as a step towards greater economic harmonisation with Australia.

In a Christchurch speech to the Conference of Independent Financial Advisers, Key will say a combined Australia-New Zealand banking supervisor would save money and strengthen transtasman understanding and consumer protection.

He says the Reserve Bank should not be concerned if its supervisory role is removed and shifted to the Australian Prudential Regulation Authority (APRA), which regulates the Australian financial services industry. Australia separates the roles of its central bank and bank watchdog while here the Reserve Bank does both jobs.

However as a first step to a single regulator, National will demand changes to Australian banking to allow protection rights for NZ depositors.

Such depositor protection would also resolve the Reserve Bank's existing concerns over Westpac, which is the only major bank not locally incorporated in NZ.

The Reserve Bank and Westpac have been in discussions with the central bank seeking clarity on protection for New Zealand depositors should Westpac's parent in Australia fail. Westpac has put a proposal to the Reserve Bank to counter its concerns and is awaiting a response.

Last month, Finance Minister Michael Cullen and Commerce Minister Margaret Wilson said Treasury, Reserve Bank and Ministry of Economic Development officials would undertake a study on the regulation of financial institutions.

They said the work would include a joint transtasman approach to regulation.

Meanwhile, Key will also say finance companies, which control about $12 billion, ought to be rated.

Consumers and investors could then easily tell the difference between the financial strength of a company with a triple A rating and another with a triple C rating.