Jones can’t ‘punish ANZ’
Shane Jones has no formal way to sanction the ANZ Bank, experts said, even as New Zealand’s regional economic development minister suggested yesterday his party could punish the Australian bank.
Jones accused ANZ of inciting ‘‘waves of fear’’ when it warned tougher capital rules by New Zealand regulators would likely cause it to shrink lending in this country, especially to the agricultural sector which is considered less profitable than other areas of business.
Jones said his party, NZ First, had ‘‘arrows’’ in its ‘‘quiver,’’ to respond to ANZ.
David Tripe, professor of banking at Massey University, said there was no obvious way for the Government to punish ANZ if it were to rein in lending in New Zealand, something the bank is legally entitled to do.
He noted that ‘‘governments have many ways of making life difficult for companies when they want to,’’ but those are arbitrary measures more usually associated with the developing world and weak rule of law. ‘‘A sudden tax investigation, for example,’’ Tripe said.
Speaking to Stuff ahead of a meeting yesterday in Melbourne with ANZ CEO Shayne Elliott, Jones said: ‘‘Our party is called NZ First. Whilst we may be written off by the banking leadership, that’s not the view of the leader [Winston Peters].’’
Bank oversight is the domain of the Reserve Bank, which is independent from the Government in all but possibly very limited and likely never used ways, another banking expert said. The expert called Jones’ intimations ‘‘bizarre.’’
Jones declined to spell out what ‘‘arrows’’ he was talking about, but said, ‘‘it would be up to [Winston Peters] as to which arrow he would pluck from the quiver’’.
He said NZ First would not pursue an inquiry into banking misconduct.
The Reserve Bank of New Zealand, responsible for regulating the commercial banks, has proposed new rules that would require banks to keep significantly more money on hand, to guard against the risks in the loans they make. ANZ, the largest New Zealand operator, has been the most vocal in criticising the proposal, warning that it would prompt the bank to shrink its business here.
Jones’ tack appears to be at odds with Finance Minister Grant Robertson. ‘‘Decision-making rests with the Reserve Bank,’’ Robertson said on Thursday following earlier comments by Jones.
Tripe said a conflict exists between the Australian and New Zealand regulators. The Australian Prudential Regulation Authority (APRA), which supervises the Australian-based banks including ANZ, also limits risk exposure. ‘‘Their rules limit the amount of exposure banks have to subsidiaries outside Australia. ANZ has the largest New Zealand operations and it’s likely that if ANZ had to increase its New Zealand capital provision by the full amount proposed, they’d be on the wrong side of the Australian rules.’’
Separate from the issue of New Zealand capital rules, the big Australian banks have suffered serious reputational and financial damage in other areas recently. Early this year the final, damning findings from a Royal Commission into banking misconduct in Australia were released, which documented extensive illegal and unethical behaviour by banks.
Prime Minister Jacinda Ardern has said she is not interested in launching a similar inquiry here, although New Zealand banking is dominated by the same big Australian banks.
In yet another area, ANZ is also under close scrutiny as it searches to replace its New Zealand CEO. Former head David Hisco left the post in June over an expenses scandal.