Greens want to ‘repurpose’ Kiwibank

James Shaw announced a Green policy to “repurpose Kiwibank and save Kiwis hundreds of millions”:

The Green Party will strengthen Kiwibank so that it can compete with the big four foreign owned banks leading to better interest rates, the Green Party said today.

To achieve better bank interest rates, the Green Party will:

  • Inject a further $100 million of capital in Kiwibank to speed its expansion into commercial banking;
  • Allow Kiwibank to keep more of its profits to help it grow faster; and,
  • Give Kiwibank a clear public purpose to lead the market in passing on interest rate cuts.

“The Government has limited Kiwibank’s ability to scale up and compete, leaving the big foreign banks free to make unnecessarily large profits off Kiwis, rather than pass on recent interest rate cuts to us all,” said Green Party Co-Leader James Shaw.

“New Zealanders could be getting better interest rates no matter who they bank with if Kiwibank was allowed to properly compete with the big four Australian banks.

“Under our plan, a first home buyer in Auckland with a $500,000 mortgage could save $690 per year, meaning they pay off their mortgage earlier.

“Across the entire economy, these mortgage savings alone translate into savings of $312 million per year. That’s a massive saving for NZ Inc.”

New Zealand’s banking sector is amongst the most profitable in the developed world.  Four foreign-owned banks control 87 percent of New Zealand’s banking industry — a situation ratings agency Standard & Poor’s recently described as ‘oligopolistic’.

“Our plan will help Kiwibank lead a change in New Zealand banking, by giving it a clear public purpose that requires it to drive competition to generate better interest rates for New Zealanders,” said Mr Shaw.

“We’ll help Kiwibank to grow faster by injecting $100 million of capital into the bank and let it retain more of its profits.

“Strengthening Kiwibank so it can create competition in the banking sector is the smartest way to ensure all banks pass on the best interest rates to Kiwis.”

Link to more information:
https://www.greens.org.nz/policy/smarter-economy/kiwibank

NZ Herald: ‘Beefed up’ Kiwibank would save homeowners big bucks – Greens

“Beefing up” Kiwibank would lead to lower interest rates and could save homeowners hundreds of dollars, Mr Shaw said.

“Under our plan, a first-home buyer in Auckland with a $500,000 mortgage could save $690 a year, meaning they pay off their mortgage earlier.”

Across the entire economy, these mortgage savings alone translate into savings of $312 million a year.

That’s a massive saving for NZ Inc.

But is it realistic? I’m sure the Green numbers will be checked over.

But Labour are sticking to strong arm tactics for now:

Labour leader Andrew Little said he would not rule out legislating to force banks to pass on cuts by the Reserve Bank…

It’s worth keeping in mind that with current support levels any changes to Kiwibank would also require NZ First support.

Last month Winston Peters slammed trading banks but gave no specifics on what he would want to do about them:

Winston Peters has got no sympathy for our trading banks.

The New Zealand First leader said the excuse used by the banks that they’re facing higher international borrowing rates doesn’t wash.

“The disparity between the actual borrowing rate and what they’re charging the borrowers in this country is a disgrace. We’re paying not the lowest interest rates in 50 years but in fact, in comparative terms, the highest”.

That doesn’t make sense. But NZ First voters, many of whom are retired and rely on interest earnings on savings, may not be happy with pushing interest rates down.

Leave a comment

21 Comments

  1. Iceberg

     /  4th April 2016

    There was never a good business case for Kiwi bank. There still isn’t. It was entirely political.

    The reality is that kiwis would have been far better off to invest all the dead capital that has gone into Kiwi bank, into shares in an Aussie bank.

    A politicians job is regulation, and we can argue about how much of that we should have, but keep the mongrels away from favoring one over the other.

    Reply
    • Pantsdownbrown

       /  4th April 2016

      I seriously doubt $100 million would even scratch the surface…………

      Reply
      • Iceberg

         /  4th April 2016

        Would scratch my surface pretty well…

        Reply
      • John Schmidt

         /  4th April 2016

        I thought so to. I recall the time the RB tried to lower the dollar using a slush fund to attempt to flood the currency market, it lasted about 4 hours before the RB got smashed by the market. I don’t even think a billion would be enough and at this point they are throwing money away on high risk business rather than grab the cream that the main banks service.

        Reply
  2. J Bloggs

     /  4th April 2016

    The irony is that in not passing on the RB cuts into their morgage rates, the Aussie banks are actually doing what the RB wants – the RB cuts reduce the attractiveness of the NZ$, while the the morgage interest rates staying high (theoretically) helps slow down the lending in the overheated property market.

    Reply
    • Alan Wilkinson

       /  4th April 2016

      Very logical and therefore passing high in the sky far over the heads of the clueless likes of Little, Shaw and the Left in general.

      Reply
  3. jamie

     /  4th April 2016

    Is that really “re-purposing”? Or just doing (one of the things) the bank was originally intended to do?

    Reply
    • Kitty Catkin

       /  4th April 2016

      Or neither ?

      If it stuffs up Kiwibank, that would be ‘repurposing’ (horrible word) in the way that crashing a BMW and writing it off would be repurposing that-into scrap metal.

      Reply
      • jamie

         /  4th April 2016

        Well no, it’s either one of the original purposes or it’s not. There’s no “neither”.

        Whether it’s a worthwhile purpose is another question entirely.

        Reply
  4. Ray

     /  4th April 2016

    Geez how many starving kiddies would half a billion feed rather than make the housing bubble even bigger
    Green muppets, please leave the economy to the big people.

    Reply
    • Kitty Catkin

       /  4th April 2016

      It’s time to print more money,
      To put the K-bank right.
      It’s time to see the Greens
      Upon the Muppet Show tonight.

      To introduce our policies,
      That’s what we’re here to do,
      To show they don’t need judgement
      And make them known to you…

      Reply
  5. spanish_tudor

     /  4th April 2016

    The useless Greens couldn’t repurpose a paper bag….

    Reply
    • Nelly Smickers

       /  4th April 2016

      Exactly right ST. They couldn’t even get their Composting Toilets off the ground!

      Reply
    • Iceberg

       /  4th April 2016

      Turei should have a reasonable idea of what to do with one.

      Reply
  6. Kitty Catkin

     /  4th April 2016

    WP’s comment makes no sense. A % is a %.

    I would think it unlikely that one would ever earn more interest than one is paying-the banks aren’t charities.

    Reply
  7. Ratty

     /  4th April 2016

    I like Kiwibank..

    I fail to see what injecting $100 million will achieve, it has fairly good cashflows, and it is meeting it objectives well for the demograph it is working with..

    Just leave it alone.. its fine

    Reply
    • Kitty Catkin

       /  4th April 2016

      If $100,000,000 could be turned into $300,000,000+, I’d say that it was a great idea, but if it could be done, it would have been. That’s a 300% profit, isn’t it ? I don’t know Kiwibank, I have always been with ANZ and National when it was there.

      Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s