Reserve Bank appointment criticised
The Reserve Bank is defending the appointment of a board member who also holds a governance role at one of the big five banks.
Rodger Finlay, chairperson of New Zealand Post, which has a stake in Kiwibank, was appointed to the board of the Reserve Bank Te Pu¯ tea Matua, which from July 1 will take on more responsibility for carrying out the central bank’s responsibilities.
But that has shocked central banking commentator Michael Reddell, who opposes having Finlay in both a central bank role, and a governance role at a major bank.
‘‘This appointment should simply never have been made. It should be revoked, or Mr Finlay should do the decent thing and resign one or other of his NZ Post and Reserve Bank appointments,’’ Reddell said.
‘‘I don’t know Mr Finlay, had never heard of him prior to this appointment, and know nothing about him beyond what is on the bank’s own website,’’ said Reddell, who used to work at the Reserve Bank, including holding the position of head of financial markets.
‘‘But he has just been appointed to the board of New Zealand banking system regulator by the minister of finance when he is also chair of NZ Post, which is the majority owner of the fifth-biggest bank in New Zealand.’’
Reserve Bank chairperson Neil Quigley said Finlay’s conflict of interest could be managed appropriately.
‘‘Mr Finlay’s interest arising from his position on the NZ Post Board and NZ Post’s ownership stake in Kiwibank has been known and addressed from the outset,’’ Quigley said.
‘‘The interest has been noted in the bank’s interest register, and carefully considered in light of the requirements of the Reserve Bank of New Zealand Act 2021. We are satisfied his interest can be managed appropriately and does not disqualify him to be a member.’’
Finlay had been working with the Reserve Bank since October 15 in preparation for the new powers being taken on by the Reserve Bank board on July 1.
‘‘Mr Finlay’s role on the transition board has been to have input into and assist with the development of new governance and policy frameworks that can be recommended to the new board when it is formally assembled on 1 July,’’ Quigley said.
‘‘Mr Finlay’s deep governance experience has been invaluable in that context and will continue to be as a member of the board.’’
Kiwibank is the smallest of the five major banks and, according to the Reserve Bank, has the second-lowest capital-adequacy ratio among them after ASB and is the least profitable of the five.
Although the Reserve Bank made clear in its May financial stability report that all the banks were strong, Reddell argued that Kiwibank’s position made it the most prone among the five to bail-out risk, suggesting that compounded the conflict of interest.