3 Comments 3 Commentsby Susan Edmunds
Data obtained from the Reserve Bank by the Green Party shows New Zealand banks' pre-tax returns on assets from 2009-2011 make them the fifth most profitable in the OECD, with only Iceland, the Czech Republic, Singapore, and Australia’s banks more profitable.
Wheeler had told the Finance and Expenditure Select Committee that bank profits in New Zealand were about average or below those of other OECD economies.
Co-leader Russel Norman said even the data showing New Zealand in fifth place was excluding banks in European Union countries, which were less profitable.
“But even on his own graph New Zealand banks are the fifth highest, even if you massage the data… I can’t see how that’s a reasonable response.”
Norman said the independent Bank for International Settlements found that Australasia's big four banks were the most profitable in the developed world for 2010 and 2011.
Wheeler said the Reserve Bank had commissioned the data before his appearance at the hearing but the analysis was not complete when he was asked about profits.
“My response to the select committee represented my understanding of the information available at that time. Our analysis was completed after the hearing and we released it to the Green Party in response to their request, which followed the hearing. We are now releasing it publicly.”
Wheeler said different measurement practices around the world, including or excluding tax and extraordinary items, meant international comparisons of bank profit figures were not easy.
Norman said it was a concern that Wheeler seemed to be supporting the banks. “He’s a regulator of banks and if he’s advocating for banks, at odds with the evidence, that’s quite concerning.”
Wheeler denied any bias. “The Reserve Bank takes seriously its mandate from Parliament to supervise the New Zealand banking system, and it does so without favour. Australasian-owned banks emerged in better shape from the global financial crisis because of their more conservative management, and our economies benefit from that strength. New Zealand’s strong banking system helped see the country through the global financial crisis.”
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I'd personally like to extend to Russel Norman the offer of a free airfare back to Australia where he came from. Of course no doubt he would likely turn the offer down in favour of a "carbon neutral" alternative i.e. kayaking across the Tasman instead. Many astute New Zealanders I am sure would be happy to wave him off as he paddled home from Queens Wharf.