New Zealand promises to restructure banking sector after regulator finds lack of competition | Wilnesh News

New Zealand’s government pledged on Tuesday to restructure its consumer banking sector after the country’s regulator said there was a lack of competition and recommended improvements, including finding ways to increase capital for state-owned New Zealand Bank.

An earlier report by the New Zealand Business Council found that the country’s four largest banks, all owned by Australian banks, did not face strong competition in the consumer banking industry.

It outlines 14 recommendations, including increasing capital for Kiwibank, New Zealand’s fifth-largest bank, lowering barriers to entry and ensuring open banking – where banks provide customer data to third parties on request so customers can better shop around – Fully operational by June.

Finance Minister Nicola Willis said in a statement that the government had asked the Treasury to engage with Kiwibank’s parent company, Kiwi Group Capital, about options to raise new capital.

She said options for increasing capital include the New Zealand Voluntary Government Retirement Savings Fund, the New Zealand Investment Fund and New Zealanders Everyday Investments.

The proposals will be submitted to the government later this year.

Willis added that she also planned to publish new financial policy terms of reference for the Reserve Bank of New Zealand this year, which would make clear the government wants the central bank to support a more competitive banking sector.

New Zealand’s banking system is dominated by four large Australian banks: westpac bank, ASB Bank, a subsidiary of Commonwealth Bank of Australia, National Australia Bank of New Zealandand australia and new zealand banking group.

New Zealand banks have total assets of NZ$700 billion (US$428 billion), according to the Banking Association. According to the Commerce Commission, the residential mortgage market is worth approximately $340 billion, with almost all households having a bank account and 60 per cent having a credit card.

Business and Consumer Affairs Minister Andrew Bailey said the government was already implementing open banking policies and expected to meet the committee’s recommended timetable.

“We agree with the Commission that open banking has the greatest potential to foster sustained disruptive competition in the medium to long term and are committed to promoting its adoption as quickly as possible,” Bailey said.

Bank of New Zealand chief executive Dan Huggins said he supported the commission’s focus on accelerating consumer data rights to increase competition through open banking.

“We are keen to accelerate growth across the business and welcome smart changes to help strengthen competition for the benefit of all New Zealanders,” he added.

New Zealand Banking Association chief executive Roger Beaumont said the report provided useful insights into the New Zealand banking industry.

“We will assess which initiatives may involve an industry approach and which banks need to address them individually,” he said.