The banking advertisement where a fresh-faced couple put their hand up at a house auction, confident that their banking advisor had “got them sorted”, gives me the creeps.
Our big banks, including this particular advertiser, have been owned from Australia since the 1990s and what with whole towns losing their bank branches and relentless paring down of customer services, cheerful, helpful bank managers have been something of an endangered species for some time. Friendly and helpful is good.
On the other hand, median house prices have been ratcheted up to a million dollars and did the couple get the point that they will have to earn two million in tax-paid earnings to pay it off? Or that any of a myriad of potential pitfalls would leave them with less equity than what they owe?
It is all a long way from the ASB bank manager who scorned my request (when I was about the same age) for a modest loan to complete the house we were building on a Cinderella property in Blackpool. Not only would it be inappropriate for us to build on such a small budget, he said, but the bank – whose august name had been on my school banking passbook since I was seven – didn’t loan money to build on Waiheke.
It was a long time before I got anything like decent joinery but at least it was an honestly held opinion.
The planet’s banking system these days can fairly be described as a Ponzi scheme. The risk that banks once managed has been farmed out and diluted. Hapless citizens are left with risky debt parcels and the requirement to stump up real, tax-paid money or lose it all.
Sub prime mortgages in the US are a grim but not distant menace.
New Zealand’s ‘big’ banks raked in $5.19 billion of profits in 2017. After reaching a billion dollar profit in the year to June, ASB’s March quarter profit grew 21 percent, with solid growth in operating income and lower expenses.
When, for the sixth consecutive year, interest.co.nz crunched the numbers for ANZ New Zealand, ASB, BNZ and Westpac NZ and compared them to the Bank for International Settlement’s annual report, we were near the top of the infamy table across a range of profitability measures – and ahead of our banks’ Australian parents, who are themselves much criticised for their strong profits.
In early December last year, a friend and I spent a wet Sunday morning surrounded by Melbourne’s weekend newspapers in a high-rise Air B&B that looked down on the Yarra River.
It was the week Australia’s Prime Minister Malcolm Turnbull caved in to years of pressure to investigate the banks, dragging the $2.3 trillion superannuation industry into his rearguard political fight over a $75 million banking royal commission, to predictable cries of outrage and much expenditure of printing ink on dire warnings.
So far, the picture emerging from the commission is squalid in the extreme. Under sustained questioning, AMP’s head of advice, Anthony “Jack” Regan confessed to no fewer than 20 separate occasions on which AMP misled the corporate regulator over charging “fees for no service” to clients of its financial advice business.
By Friday, AMP’s CEO Craig Meller had resigned, effective immediately.
Meanwhile, the Commonwealth Bank admitted to charging fees to dead people and Westpac – a frequent finalist in New Zealand’s Roger Awards for The Worst Transnational Corporation Operating In Aotearoa/New Zealand – said it paid bonuses to a financial adviser it knew was churning clients into high-fee investments.
Radio NZ has described the Australian trainwreck as a wake up call for New Zealand, Massey University’s Dr Claire Matthews saying now would be a good opportunity to look further into banking practices here.
Others, including new Reserve Bank governor Adrian Orr and consumer affairs minister Kris Faafoi, don’t agree and the New Zealand boss of AMP has insisted to the NZ Herald that none of the practices being scrutinised in Australia are taking place here, but that’s specious at best.
The regulations that the banks operate under here are different from Australia – and not in a good way.
Our rules were locked and loaded in the Rogernomics/Richardson years and the even fatter profits the parent banks have gleaned from their New Zealand operations over the intervening years would indicate that we have been sitting ducks in the face of deregulation orthodoxy and naked housing speculation not tolerated – even in Australia.
It’s a pretty safe bet that banks and banking that suit the social and business aspirations of Kiwis aren’t coming from over the ditch any time soon. • Liz Waters