Shared bank rules will hurt NZ: local chief

By GARETH VAUGHAN


New Zealand would have as little influence as Tasmania under a single transtasman banking regulator, says TSB Bank managing director Kevin Rimmington.

Any move to a joint regulator would result in a loss of sovereignty, he says.

Of New Zealand's 18 registered banks, only TSB and Kiwibank are New Zealand-owned.

Government officials will report to Finance Minister Michael Cullen early next year on whether having a joint regulator would help New Zealand's growth and development.

The National Party supports the move as a step towards economic harmonisation with Australia.

But Rimmington said yesterday: "I have reservations because the size of New Zealand means the chances of us getting influence are reasonably minimal.

"New Zealand as a country would probably have as much say as Tasmania."

All four of New Zealand's main banks - ANZ National Bank, BNZ, ASB and Westpac - are Australian-owned. They hold 85 per cent of this country's banking assets.


Massey University senior banking lecturer David Tripe said one potential cost of joint regulation could be a drift of jobs to Australia.

Also, the Reserve Bank stance of making foreign-owned banks keep some information technology capacity in New Zealand would probably no longer be justified.

Tripe said Australia's more "intrusive" regulatory approach would be more time-consuming and labour-intensive, and probably more costly.

Rimmington said cosying up to the Australians would increase compliance costs, especially for TSB and Kiwibank, which did not have parents operating under Australian rules.

"At the end of the day consumers will pay for these."

Westpac spokesman Paul Gregory said the regulations were more important than who enforced them. "It's about what the regulations are, and whether those are enforced by one regulator is a secondary issue."

BNZ chairman Kerry McDonald, who also heads the NZ branch of the Australia-New Zealand Leadership Forum, said he was delighted that Government ministers had put transtasman banking integration on the agenda.

"There's every chance gains could be made in the efficiency and effectiveness of bank oversight."

Reserve Bank Governor Alan Bollard said this month that the bank wanted to explore a more defined and potentially more formalised co-ordination with Australia.

But the flexibility of each country's authorities to take independent steps to protect their own interests needed to be preserved.