Overseas banking villains suck New Zealanders’ wealth offshore

By   /   February 19, 2018  /   14 Comments

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The ANZ is our biggest bank, with around one million Kiwi customers and 31.3% of the market. The ANZ lending business is worth about $72.35 billion, with net loans worth $117.24 billion. That reflects staggering wealth to have in the hands and at the mercy of overseas banks.

The news that the four main banks in New Zealand, all foreign owned, made record profits in the last financial year, and shipped those profits offshore, generated little obvious controversy. But economists and commentators agree that NZ’s oligopolistic banks are in a privileged position. They can create their own wealth out of thin air, lend it out to the public, charge rent on it in the form of interest, and shift profits offshore. This means the banks share ‘an extraordinary privilege’ not enjoyed by any other type of business. But their huge market share means the four biggest banks operating in New Zealand, are among the most profitable in the world, and last year, they made their biggest profits in three decades.

The biggest banks in New Zealand, ANZ, BNZ, Westpac, and ASB, all owned by Australian banks, who all own each other, plus Kiwi owned, Kiwibank, collectively made a $5.19 billion profit last year, including a massive increase of 7.35% or $355.11 million in net profit, after tax, last year. They own $504.19 billion in (NZ) assets. The four big overseas banks own about 90% of New Zealand’s banking industry, as well as insurance and other financial services. Though they’re bit players, other overseas banks also recorded record profit increases, with three Chinese banks, growing profits by as much as 139%. 95% of those total whopping great banking profits leave the country and are lost to peoples’ disposable incomes, to their pockets, and the New Zealand economy.

Unfair fees and charges, arbitrary interest rates and induced debt, add to poverty, dangerously high levels of personal debt, a distorted housing market, inequality, and economic instability. Banks act like parasites, sucking the money and life out of debtors and shifting the profits off shore.
Fees comprise almost 40% of the banks’ profits, and the big four Australian owned banks in New Zealand charge higher fees here than their Aussie parents do at home. New Zealander debtors are wage slaves to overseas owned banks who owe no loyalty to their customers (It’s a business transaction), or their staff (note banking sector layoffs of late), or communities (branch closures). These banks encourage debt and trap the public in to unjustified credit and account charges. In a perfectly competitive market with ‘well informed and rational consumers’, customers would reflect their dissatisfaction with such a rort by finding another bank. But when the main banks dominate the market (“monopolistic competition”), and customer inertia is high, it’s hard to swap banks and most of them are the same in different guises anyway. Marginal competition means marginal choice, and maximum chance of consumer capture.

Unfortunately, high fees and lending rates from banks that lack integrity, are little disincentive when would be home owners are faced with the decision to borrow on usurious conditions or not to borrow and own a home at all. (And then there’s the housing speculation fueled by enthusiastic bank lending). Even though bank switching is likely at major life changing junctures, even where customer dissatisfaction with banks is high, bank switching is infrequent because of the transaction costs and other complications involved. Surprisingly also, most people are satisfied with their bank. In a recent survey, the banking sector had a customer performance ranking of 79.5% satisfaction. This is a high satisfaction rate compared with overseas standards, but though the smaller banks score more highly than the overseas institutions, the bigger banks dominate market share.

The ANZ is our biggest bank, with around one million Kiwi customers and 31.3% of the market. The ANZ lending business is worth about $72.35 billion, with net loans worth $117.24 billion. That reflects staggering wealth to have in the hands and at the mercy of overseas banks. But the imbalance within the banking system goes as far as the top. The CEO of the ANZ, David Hisco in 2015, earned about $5million, 120 times the pay rate of the ANZ’s lowest paid workers. The CEO of the Commonwealth Bank in Australia who owns the ASB, earns $A12.3 million per annum, in three days what the average Aussie earns in a year.

Cheap credit and eager bank lending mostly by overseas banks, has fueled the New Zealand housing market and left citizens with household debt higher than ever before, sitting now at 167.5% of household income. That’s debt you know the banks would be more than willing to call in if interest rates rose and current lending viability and profit expectations were negatively affected.

So while New Zealand’s attention, and that of the government, is on the alleged impact of foreign ownership of residential houses on the inflated property market, the biggest foreign owners of New Zealand wealth (current and future), in the form of Australian banks, goes unaddressed. Foreign ownership of banks is of greater scale here in New Zealand than almost anywhere else in the world. Net interest margins and profitability rates are higher here than in most other developed countries. Our current and future earnings, wealth, and real estate are in the hands of foreign banking oligarchs. That’s of greater concern, and greater scale, than individual foreign ownership of houses. But there will be no crack down on the banks, in fact in times of crisis, they’re more likely to be bailed out or at least assured of some security, because they’re too big to fail. Attention to small scale overseas buyers of residential land in New Zealand is a misplaced energy, when a magnitude of different wealth is extracted, debt created, and a housing boom exaggerated, by the construction of credit, the entrapment of debt, and the transfer offshore of profit by the big four overseas banks who are the major players in the New Zealand finance sector.

The old saying is as apt as ever “The law locks up the man or woman, Who steals the goose from off the common, But leaves the greater villain loose, Who steals the common from the goose”.

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14 Comments

  1. Sam Sam says:

    Chairmen of ANZ Dr John Key has a responsibility to his shareholders. We do not have that responsibility. We must think in terms of 5 yrs, 10 yrs, 20 yrs and so on. We must buy into something that invests in growth over 20 yrs and grow with them, then we must go with that bank. If there are other banks other than the big 4 kiwi banks that have better quality mangers, analysis, IQ and accountability and the inherent capability to recover then we’ll have the $ to make those investments.

    I can’t say what banking executives are thinking but there must be intelligent people amongst them who understand the consequences of the development process of Aotearoa-New Zealand. They must know that if they go on in this way then they will privatise the tax system and tank the economy. Then there are consequences for the single payer market that means millions of people living off retail & manufacturing will be hurt. But then we are not in control of merchant bankers, they can not solve New Zealand’s problems.

    It’s very hard making money, some even say very boring and monotonous, the best business people are right only half the time. And that’s the most important takeaway is to protect your money and capital always.

    Just don’t try and do stuff that you are not favoured by nature to do.

  2. Johnnybg says:

    Our nation began its life as a colony administered from New South Wales, nothing has changed. These greedy Aussie pricks need to be brought to heal!! As long as we continue our love affair with wishy washy liberal democracy this will not happen. Boycott the bastards & their enablers or join the groundswell for a patriotic, fire & brimstone national unity government with real teeth. (The Chinese solution)

  3. Strypey says:

    I notice the Cooperative Bank and TSB (also NZ-owned) don’t even rate a mention. It would be nice to think that if the majority of ordinary kiwis shifted their banking to one of the NZ-owned banks, the stats you give would be turned around. But I suspect that the vast majority of the money going through NZ banks is business banking (including property speculation), and that even if every kiwi moved their personal banking the banks would hardly notice. If I’m right about this, then the banks are competing for the business of the international wealthy, not the people who live and work in this country. A sad state of affairs.

  4. WILD KATIPO says:

    Great article !

    Should be on TV exposing all this . It has in the past , but always quietly buried. I also like the comments of JOHNNYBG , its fast coming time when all this legalized theft has to stop.

    We have had 3 decades of this open market / deregulated neo liberal rort, and in that time generations have grown up who haven’t known any better. Its high time they did. And sometimes people just have to be confronted with the facts. Its not good enough to appear all charming while stealing the cash out of your back pocket. Because that’s what these banks are doing.

    Customer satisfaction ?

    They are only ‘satisfied ‘ because most of them know no better, – and like you say , – it costs to change banks.

    We need to get rid of them, – or , – heavily regulate their operations in NZ and relegate them to only certain areas of finance , preferably minor positions.

    • Spoon says:

      Unfortunately Wild Katipo, it was on TVNZ but all the waste of space reporter did was pretty much suck the balls of the banks in telling how much they made and that the Aust regulator was thinking about an investigation….

  5. Brendan says:

    It is the big fish eating the little fish. The Aussie banks are controled by ths big boys HSBC..JPMorganChase…. CitiBank …….https://goo.gl/images/ZAMevJ
    These banks also control.60% of Fletcher Building. They are buying our land, building houses and then landing us the money to buy them. y controlling the flow or availability of finance they are engineering a housing shortage and inflating prices. And they call it good business. ..robbery.

  6. Michelle says:

    The trouble with too many NZers is we tend to sit back and accept the status quo.
    Too many stay with the same foreign bank they need to switch to a NZ owned bank and put our money into banks that keep the money in our own country for us.
    Its time for a change of attitude about where we put our money the aussie banks are creaming us I got sick and tired of westpac they always wanted more and more and gave very little in return

    • WILD KATIPO says:

      If you can knock out the monopoly of these finance thugs , the wealth would start to return. Personally , I like the idea of minting our own cash
      as well , – interest free. And we would have no problem with trade because there are too many high level vested interests that would be burned if they reject it.

      I like the idea of patriotic nationalism. And that includes this most important of areas. I also like the idea of giving these foreign manipulators their marching orders or giving them the choice to pull their heads in and tow the line. We dont have to take any of this shit.

      All it would take is a groundswell of popular opinion and the movement would take, – then become politicized. Peters tried, but back then the neo liberal disease was too deeply entrenched. Well , times have changed.

      The problem currently being Robertson and a few others of that description,.. so we wait…

      But the buzzy bees, the Telethons, the Fred Dagg gumboots,… those belonged to another time whereby we self aggrandized and gloried in our ‘ low key ‘ approach to all things . Yet it also served to create a lackadaisical approach which made us sitting ducks for Roger Douglas and his treasons.

      But times have changed since then, even.

      Political agitation on this issue should be front and foremost and relentlessly pursued.

      Bring the wealth back to New Zealand !

  7. mosa says:

    Bank is just another word for legalised theft.

    The money being extorted here is terrifying.

    No counter revolution coming from the current LAB, NZF , GRN government and it is too late now because Neo liberal policies have a strangle hold on everything.

    And Winston wanted to turn the clock back to happier days.

    Ain’t happening

    • Afewknowthetruth says:

      Exactly!

      I forget the exact wording but the quotation (originally German, I believe) goes something like this:

      The crime of robbing a bank is a mere trifle compared to the crime of establishing a bank.

    • Jack Ramaka says:

      They call it usary ?

  8. John W says:

    Bankers have run NZ for a long long time.

    They own more than half of NZ and if all threads were able to be followed then it would appear that Kiwis own precious and decreasing little.

    Creation of money is the key to the global banking empire which has been built on fractional reserve laws, and a complete lack of transparency regarding the international dealings facilitated by global banking networks who are responsible to no govt.

    For every dollar held in deposit or other asset, a bank in NZ is by law, allowed to “lend” $9 against that $1 “held”. When that “loaned” money is paid back it is owned by the bank, PLUS the interest on that money they did not own/hold in the first place. The Reserve bank acknowledges that over 97% of new money is created by Private banks in NZ. (out of thin air)

    Default loan payments are realised by mortgage sales and collateral. They cannot loose but that is not how their books are structured.
    On their books they can show a loss by default of loan and also as capital is extracted and turned into assets through many mechanisms and practices allowed and involved with the entire global network.

    You may think that ongoing 900+% profit is Ok but then interests and charges are on top of that. If the $1 used to theoretically lever the loan of $9 then they really own none of the loaned amount.
    Take note that the booty gathered is compounded over time.
    But banks books are virtually closed to scrutiny and no Govt can hold them to account when transactions become deliberately complex and intertwined with daily off shore transfer of massive amounts of money while you sleep, into a multiplex of channels that even local Bank mangers have little cognisance of.

    The NZ reserve bank acknowledges that at least 97% of new money ( free money) is created by private banks in NZ. That does not include Govt loans which are a direct drain of our taxpayer contributions to off shore wealth gatherer at insignificant cost to them.

    The NZ Govt under bankster john key, quietly passed legislation that will allow banks to take away your hard won deposits to prop up their books when a collapse takes place, as history shows is a regularly managed event. This will be further outright theft but thieving is how banks operate. Key has just extended the scope and their rights, to ownership of your meagre savings.

    The collapse of values globally allows acquisition of assets ao a grand scale at fire sale prices.
    Key also facilitated allowing International banks to ring fence ownership of mortgage and other prime collateral/assets so that when banks are pulled to collapse ,those major assets are not in the hands of liquidators nor anyone else in NZ.
    That bankster key will soon head Westpac in NZ. He is one of the Bankster tribe, anointed for his ruthless predatory performance and connections within banking including the privately owned Federal Reserve gangsters who bleed the USA. key talks or “the club”

    As NZ Govts are controlled by bankers and their networks, you will not hear discussion in Parliament against the banking system heist of NZ. The pivotal Fractional Reserve legislation will never be debated.

    Russell Norman found the consequences of even suggesting some Quantitative Easing by NZ Govt. Banks do the equivalent everyday as routine private profit pillaging on a massive scale but NZ Govt or parliamentary representatives even talking about creating money for the good of the Govt and country is strictly verbotten.

    Can this system be changed, possibly not as they are in control. But things can be done to compete for the good of NZ and Kiwis.

    John A Lee showed us how a competing system can be implemented where the NZ Govt took over some of the lending using the State Advances institution. Loans and mortgages were extended from a Govt agency to Kiwis and Kiwi businesses at low rates for the time. Succeeding Govts eroded this state function which now has been abolished. Banksters win over politicians and Kiwis again.

    http://nzetc.victoria.ac.nz/tm/scholarly/tei-GovCour-t1-body-d5-d23.html

    History surrounding John A Lee I see has been rewritten quite recently to construct that he was a damaging influence.

    Norman Kirk and Jim Anderton also moved to make NZ less a victim to international Bankster. Kirk’s legacy has been destroyed and Jim’s Kiwibank is in danger of being privatised into the cabal. ANZ has already swallowed up the NZ Post Office banking and wiped that from the map. National has given notice that Kiwibank will be privatised. Moves to infiltrate management and restructure so other parties hold capital in the bank are the first steps to pulling the rug out from under Kiwibank.

    http://www.positivemoney.org.nz/

    roger douglas who was a stooge for bankings internationale and misguided cohorts split many Govt functions away into corporate entities. The rot is then managed over time.

    Eventually they will all be privatised unless Kiwis wake up and become actively engaged in change.

    • John W says:

      Typo – key will head ANZ not Westpac. The foreign banks in NZ are mainly owned buy the same groups of off shore “investors” anyway.

  9. Jack Ramaka says:

    Pity we sold the National Bank of New Zealand, the Bank of New Zealand, the Bank of New South Wales (NZ) and the Rural Banking Corporation of New Zealand all once proudly New Zealand owned and operated. Previously professionally operated by New Zealanders, profitable and 100% New Zealand owned Banks ?

    The Japanese and the Chinese would never let their Banking Institutions pass into foreign ownership, as they are critical to a country’s sovereignty and self determination. Our forebears built those banks since the founding days of New Zealand as a Nation ?

    Built on the blood sweat and tears of our ancestors including the Maori People who helped clear the land and forests for farming, built the roads, railways, hydro electric power stations etc ?