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  Reply # 2117992 1-Nov-2018 17:25
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Fred99:

 

MikeB4:

 

Is $2B profit ridiculous bearing in mind we do want a healthy banking sector? No it is not given the size of the organisation, assets = circa A$800 to A$900 Billion

 

To me it seems like corporate greed.  Not greed, a healthy banking system with good financial backing is good.

 

Where did the $800-900 billion figure come from?  Market capitalisation of ANZ banking group is about = NZ$100 billion.

 

The $2 billion profit was for their NZ operations alone!  

 

Bank profits per capita are apparently 25% higher in NZ than in Australia, where the interim report from the Royal Commission finds:

 

“Banks and other financial institutions have put profits before people, greed has been the motive as short-term profits have been pursued at the expense of basic standards of honesty. Too often simply selling products has become the sole focus of attention.”

 

Mr Frydenberg said the culture and conduct was reflected in the banks’ remuneration practices, with “almost every piece” of misconduct identified in the report “connected directly to some monetary benefit”.

 

You'd have to be extremely naive to believe that the Aussie banks operating in NZ manage to achieve higher profits here than they do over there - but "everything is fine in NZ".

 

Keeping in mind that Australia has a lot more competition when it comes to banking - maybe the focus should be how we can encourage Australian based banks to start offering services to New Zealand customers without having to setup costly infrastructure in New Zealand.





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  Reply # 2117998 1-Nov-2018 17:49
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eracode:
Lias:

michaelmurfy:


At the end of the day, they're a company, they're there to make money and this all builds a stronger bank in the process which is less likely to fall.


You can ask most ANZ staff members and they'll agree with this statement.



FWIW I'm an ANZ customer and I'm friends with a manager there who would absolutely agree with you that it's a great place to work. I don't have any objection to ANZ as such, I just object to _any_ company, let alone a foreign one (and ANZ NZ might be stand aloneish, but it's still a subsidiary of a foreign company) making that much money, and I believe that our government needs to take more radical action to make it impossible for any company to make a profit like that. Companies should only be able to make reasonable profits, unchecked capitalism simply needs to be legislated out of existence, and at a certain point both individuals and companies should be paying 100% tax on the dollar to stop them earning obscene amounts. 



Taxing them 100% won’t stop them earning the $2b that you object to - just redirects the profit from the shareholders to the government. The evil that you perceive won’t be directly eliminated that way.

If you want them to earn less, you’ll have to control their margins (or other aspects of their operations) by legislation or regulation.

Better still - nationalise ‘em - and see how that plays out for a strong and competitive market.


@Lias Interesting that you +1’ed me. I was trying to be sarcastic about nationalising the banks - it’s a ridiculous idea.

As for my comment about controlling banks’ lending margins through legislation or regulation, that’s equally ridiculous. Muldoon tried something similar in the 1970’s with his Interest on Deposit Regulations. It was a complete disaster - didn’t work and introduced countless distortions into the economy.

Like @JimmyH I think wthat you are espousing here is irrational and unimplementable.

 
 
 
 


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  Reply # 2118041 1-Nov-2018 18:48
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sbiddle:

 

 

 

And many NZers seem to forget that the strength of the Aussie banks was what ultimately saved us from the worst of the GFC.

 

 

 

 

I think it had a lot to do  with the government guarantee being introduced with urgency. What they wanted to avoid was a run on the banks, which potentially could have happened if it wasn't for some form of government guarantee. Fear is what is often a driver to these problems, and a government guarantee gives people a lot of certainty. However in NZ we have removed that guarantee, yet other countries included Australia still have it in some form.


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  Reply # 2118059 1-Nov-2018 19:59
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Now we've got the OBR.

 

It sounds like a great idea in theory.  In practice, I expect that as soon as there's a run on one bank and the OBR is brought in (and depositors take a "haircut"), every single person with bank deposits will freak out, and try to withdraw funds ASAP from their banks to avoid taking a haircut.  IOW, it'll be as contagious as it ever was, though OTOH, everybody losing say 10% of your money in one hit is possibly fairer than some people losing nothing - if they get in quick - and others losing everything.

 

Just so long as it's 10%.  I have my doubts.  


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  Reply # 2118064 1-Nov-2018 20:04
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mattwnz:

 

sbiddle:

 

 

 

And many NZers seem to forget that the strength of the Aussie banks was what ultimately saved us from the worst of the GFC.

 

 

 

 

I think it had a lot to do  with the government guarantee being introduced with urgency. What they wanted to avoid was a run on the banks, which potentially could have happened if it wasn't for some form of government guarantee. Fear is what is often a driver to these problems, and a government guarantee gives people a lot of certainty. However in NZ we have removed that guarantee, yet other countries included Australia still have it in some form.

 

 

 

 

The aussie banks were never in a position to fail yet they were the ones that had to foot the bill (tens of millions from memory). In effect the big banks were subsidising the small, dodgy finance companies 


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  Reply # 2118065 1-Nov-2018 20:10
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I'm a trustee of a charitable trust and we bank with ANZ Private.

Speaking as a Trustee (I don't bank with them personally), I can't fault the service we get. It's not quite C. Hoare & Co., but you'd not expect it to be.

The people there do a great job growing the Trust's funds and looking after us.





gzt

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  Reply # 2118096 1-Nov-2018 21:04
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Looks like just another consquence of an over-active property market leading to continously refreshing mortgage growth:

Interest.co.nz: ANZ continues to gobble up home loan market share, winning more than a third of the growth in the final quarter of 2017. Other banks who raised their market share in value terms include most of the challenger banks. But all ANZ's main rivals leaked market share when it is measured on a value basis.



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  Reply # 2118097 1-Nov-2018 21:07
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If I had my time over again I would go with them not just because they have a good name, but because they offer Apple Pay.


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  Reply # 2118103 1-Nov-2018 21:18
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I bank with whomever offers the easiest parking.





Swype on iOS is detrimental to accurate typing. Apologies in advance.


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  Reply # 2118105 1-Nov-2018 21:25
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Batman:

I bank with whomever offers the easiest parking.



Parking? You actually go to the bank?





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  Reply # 2118172 1-Nov-2018 23:22
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Fred99:

 

Now we've got the OBR.

 

It sounds like a great idea in theory.  In practice, I expect that as soon as there's a run on one bank and the OBR is brought in (and depositors take a "haircut"), every single person with bank deposits will freak out, and try to withdraw funds ASAP from their banks to avoid taking a haircut.  IOW, it'll be as contagious as it ever was, though OTOH, everybody losing say 10% of your money in one hit is possibly fairer than some people losing nothing - if they get in quick - and others losing everything.

 

Just so long as it's 10%.  I have my doubts.  

 

 

Most people think that our bank deposits are government guaranteed, yet NZ is one of the few countries that have a bail-in law. It allows banks to seize our money to pay for their failed gambles. This is why, I suspect, banks in NZ have higher profit margins.  They can take higher risk investments. When they pay off then sweet profits, when it fails, then just take some term deposits. They banks should be paying bonus interest rates to people with bank deposits since it is their money that is at risk. 

 

 


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  Reply # 2118548 2-Nov-2018 14:14
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debo:

 

Most people think that our bank deposits are government guaranteed, yet NZ is one of the few countries that have a bail-in law.

 

 

I don't know anyone who thinks that bank deposits are government guaranteed. If you want a government guarantee you should buy government bonds - the Debt Management Office does retail these.

 

debo:

 

It allows banks to seize our money to pay for their failed gambles. This is why, I suspect, banks in NZ have higher profit margins.  They can take higher risk investments. When they pay off then sweet profits, when it fails, then just take some term deposits. 

 

 

This is inaccurate and misleading. Before this is triggered and depositors take a haircut the bank's shareholders (=owners) first lose all of their investment. It's more accurate to say: "They can take higher risk investments. When they pay off then sweet profits for the shareholders. When they fail then the shareholders lose money and can be wiped out."

 

Good summary here.

 

debo:

 

They banks should be paying bonus interest rates to people with bank deposits since it is their money that is at risk. 

 

 

Different banks already do pay different interest rates for the same account types and term deposit maturities. Largely this reflects their different credit ratings, with lower rated (=higher risk) banks having to pay more, and finance companies more still etc. At a minimum, you should be aware of a banks credit rating before depositing money with it. And shouldn't be putting all your eggs in one basket.


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  Reply # 2118570 2-Nov-2018 14:35
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ockel:

 

Not quite true.  Some of the Aussie banks required US Fed support during the crisis - and required RBA intervention and guarantee to ensure that they had lines of credit for outstanding USD positions.  I think 3m swaps were involved.

 

 

Yes, but there is a bid difference between liquidity and solvency. The banking system works on confidence. It is absolutely the role of the central bank to step in and supply the system with liquidity in a panic, otherwise the financial system fails, well run and sound institutions fall over, monetary aggregates contract sharply, and the economy crashes. That's how the banking panic in the 1920s was, in large measure, a key (not the only) cause of the 1930s depression.

 

Letting individual and insolvent banks fail because of bad lending is one thing, and what OBR is targetted at. Letting sound banks fail and the whole system collapse because of a panic is quite another.

 

This has been well understood since the days of Henry Thornton and the debates between the Currency School and the Banking School; and the suspension of the Bank Charter Act (1844) in 1866 when a financial crisis followed the failure of Overend, Gurney & Company.

 

The Fed support in question was for liquidity, not solvency.


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  Reply # 2118600 2-Nov-2018 14:55
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JimmyH:

 

 

 

Letting individual and insolvent banks fail because of bad lending is one thing, and what OBR is targetted at. Letting sound banks fail and the whole system collapse because of a panic is quite another.

 

 

 

 

 

 

What is bad bank lending though, and how do different NZ banks differ from one another in terms of ending. I know some banks lend more to the rural sector, but many banks seem to do a lot of home lending. I don't think many NZers don't know about the OBR, let alone understand it.


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  Reply # 2118635 2-Nov-2018 16:07
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I've been hearing the customer service for new mortgages is excellent. Maybe success in that area is not driven with targets and the like. Ie; good old customer service at work.

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