Editorial: BNZ will get no credit for art sale

The bank was sold in 1992. Photo / Alex Burton

EDITORIAL

The BNZ has been owned by the National Australia Bank for exactly 30 years but obviously still sees a commercial benefit in keeping its national brand. It has not done that brand any favours with its decision to put its magnificent collection of New Zealand art on sale to the highest bidders.

Many will agree with former Prime Minister Helen Clark who told the Weekend Herald she found the auction "really quite distressing". This is a collection of 200 paintings by many of the country's best artists. They were collected by the Bank of New Zealand when it was wholly Government-owned.

When the bank was sold in 1992 it is unlikely the art collection figured significantly in the estimates of the bank's value by the purchaser or the seller. It certainly did not feature prominently in public and political discussion at the time.

Clark, a member of the Government that had floated 15 per cent of the BNZ in 1987 and a further 34 per cent in 1989, says, "This is something that should have been thought of at the time of privatisation".

Provision could have been made to keep the art collection in public ownership at the outside of its partial privatisation (by Labour) or at the sale of its remaining stock (by National), but there is no point in recriminations. We could have expected the BNZ would recognise the collection's public value if it no longer wanted it.

Banks do not lose public responsibilities by virtue of being in the private sector. In fact, their central importance to any economy puts them in a special position of public responsibility. If they do not quite have a licence to print money they have a licence to issue credit, which has a value far greater in the national economy.

Bank lending in New Zealand exceeds $500 billion, for an economy of $360b. The economic benefit of having banks in the private sector is that loans are made on strictly commercial assessments of borrowers and the banks are answerable to shareholders for their own financial results.

Right now they are reporting extremely high profits, thanks to their returns from the highly inflated property markets of recent times and the low interest rates they have paid for savings deposits and other sources of wholesale funding.

Most banks, especially the big four that dominate New Zealand's economy, normally display an acute awareness of their privileged position by attending assiduously to their public relations and sponsoring a great deal of the country's sporting and cultural pleasures.

The BNZ has obviously anticipated the damage its art sale could do to its public standing because it promises the proceeds will go to a BNZ Foundation that will make grants for good causes.

It does not mention that cash donations carry tax deductions that are not available for cultural gifts. Perhaps they should be. But we would have expected better from a bank that trades in New Zealand's name.