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Wheeler denies bank bias

Reserve Bank Governor Graeme Wheeler is massaging data to make New Zealand banks look less profitable, the Green Party says.

Tuesday, December 4th 2012, 2:45PM
by 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.”

Comments from our readers

On 5 December 2012 at 4:25 pm Amused said:

Russel Norman and his Green Party cohorts seem to always see the big banks here as public enemy number one. This despite the large number of kiwis these banks employ daily in jobs and the amount of sponsorship they donate regularly to the NZ community as a whole. Banks are businesses at the end of the day and by definition are thus in the business of making money. They shouldn’t have to apologise for making a profit for their shareholders (no matter how large it is) In fact if they weren’t making a good profit it wouldn’t be a good sign for our economy not one little bit. The Green Party’s simplistic view of the world might “seem” to make sense within the confines of a student campus or the haze of a legalise cannabis rally but in the “real” world they look embarrassingly out of touch with how a fully functioning economy is supposed to perform. 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.

On 5 December 2012 at 5:14 pm Bruce said:

Haha, I would love to push the kayak out and waive this silly communist goodbye. Funny how he doesn't seem to have a problem the NZ Super Fund holding bank stocks, prehaps even his own personal portfolio. This is a clear vote gathering excersize, let's just hope Kiwi's are smart enough to see through the thick marjuana smoke screen...

On 5 December 2012 at 8:31 pm w k said:

@amused: Cannabis have obviously stuff up their thinking, so hard to blame them for the way they think. Oh btw, have it occur to you that RN could be sent here to sabotage our economy? Just a thought.

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