Potential ANZ exit should be “welcomed with open arms”

With ANZ threatening to review the “size, nature and operations” of its business in New Zealand, Social Credit Party Leader Chris Leitch says an ANZ exit would significantly benefit the New Zealand economy and should be “welcomed with open arms.”

ANZ indicated in its submission paper that it may pull back if the Reserve Bank goes ahead with its proposed capital requirements.  Leitch says this would give local banks such as TSB, Cooperative Bank, SBS and Kiwibank the chance to grow, and would open up opportunities to provide much needed capital to the SME market – a key driver of the New Zealand economy.

“The banks have taken the easy road so far, and that’s lending into the property market,” Leitch told NZ Adviser.

“If you look at the lending profiles of banks over the past ten years, they’ve moved very substantially into that mortgage market rather than lending to small and medium-sized businesses. That means that many SMEs have found it much more difficult to access capital than they should, especially if we want to use small business to drive the economy.”

“The capital requirements would also make the big banks much safer in the event of a banking crisis,” Leitch continued.

“When it comes to ANZ, they weren’t even meeting the existing capital requirements of the Reserve Bank. From the point of view of New Zealand, increasing required capital reserves has got to be a good thing.”

Despite this, Leitch says ANZ is unlikely to follow through with their statement in any major capacity. ANZ’s first-half net profit for the six months ended March 2019 was almost $1 billion, and it currently finances over 30% of all home loans in New Zealand – meaning this is more likely an attempt to put pressure on the Reserve Bank, and to build up public support against the proposed changes.

Leitch also highlighted Germany as a ‘prime example’ of a strong economy comprised of SMEs, who rely on a vast number of community-owned banks to build up their productive capacity.

“The German economy is one of the strongest economies in the world, and it is driven by the small and medium size business sector,” Leitch said.

“The banking structure in Germany is a large number of small community banks, and their focus is on the businesses in their own communities. The exit of ANZ would be a great start towards reclaiming control of our banking sector and our economy.”