Greens: Foreign-owned banks make too much money
Fri, 05 Oct 2012 12:32p.m.
The Green Party is critical of "excessive" profits made by big Australian banks in New Zealand since the global financial crisis while other industries' profits have slumped.
Research from the Parliamentary Library shows the big four trading banks - ANZ, BNZ, ASB and Westpac - collectively made more money in the four years following the global financial crisis than the four years preceding it.
Their 2008-2011 combined net profit before tax was $14.4 billion - $337 million more than in the 2004-2007 period.
However, the banks' profits took a $2.2b hit after settling a dispute over structured financial transactions with Inland Revenue in 2009.
All New Zealand industries, by comparison, took a 14.9 per cent hit - falling from a before tax surplus of $214.6b in 2004-2007 to $182.7b in 2008-2011.
Green Party co-leader Russel Norman says the banks' profits, teamed with the high level of foreign ownership in the banking sector, are causing long-term damage to the economy.
He accused outgoing Reserve Bank governor Alan Bollard of complacency over the issue, after Dr Bollard last week admitted bank profits in New Zealand are "higher than in most other banking systems".
"His complacency is astounding, for the excess profits banks are making are simply damaging the rest of the New Zealand economy and contributing to our number one problem - a high and persistent current account deficit," Dr Norman said.
He says incoming Reserve Bank governor Graeme Wheeler will face a challenge of promoting competitive behaviour in the banking sector "so that the rest of the economy isn't suffering due to excessive profit-taking".
"The challenge for the Government is to build up our New Zealand-owned banks to stem the flow of profits offshore."
New Zealand-owned banks make up just six per cent of the sector.
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8/10/2012 8:18:27 p.m.
Darryl Nightingale wrote:
Yes, the banks pay taxes - when they are forced to.
Toward the end of 2009, the High Court found that BNZ and Westpac had been avoiding tax. Westpac agreed to pay back NZ$885 million and BNZ agreed to pay back NZ$658 million.
Knowing that they too would be found guilty, ANZ agreed to pay back NZ$400 million and ASB NZ$250 million.
All in all, the four banks agreed to pay $2.2 billion in back taxes that they had fraudulantly left unpaid - 20% LESS than IRD had been seeking.
8/10/2012 6:36:12 p.m.
Legalized theft wrote:
To rob a Bank, Own a Bank.
6/10/2012 9:30:56 a.m.
Of course they make too much money - but there are locally owned alternatives (TSB, Kiwibank. SBS and Co-operative) If people have an issue with foreign ownership, switch to a local bank!
6/10/2012 7:31:17 a.m.
@JOHN - But do the foreign banks pay their fair share of taxes in New Zealand? Not if they can avoid it, it would seem. It was not so long ago that Australia’s four biggest banks agreed to pay a total of $2.2 billion New Zealand dollars to settle the largest tax avoidance case in this country’s history. And that was only 80 percent of their disputed tax amount. Seeing their profits increase after the GFC, while everyone else is forced to tighten their belts, is galling. The big Australian banks are like parasites on this country.
5/10/2012 5:49:47 p.m.
New Zealand Greens is Highly against anything Foreign owned even if that Foreign Owned Company pays its fair share of taxes in New Zealand, shouldn't they be Changing the name of Kiwibank to Government Bank instead? shouldn't they be going after kiwibank which is being run with taxpayers money? creating new Debt on the top of old Debt, New Zealand Greens are crazy just like the Australian Greens over here.
5/10/2012 5:17:07 p.m.
The Greens couldn't find their own backsides with two hand, a map, and instructions.Have the Greens looked into where the profit came from and why? Hardly as that might take 2 braincells to rub together.NZ banks expected the NZ dollar not to rise as far as it has, and they have made exchange profits from that. They could have easily made exchange losses if they had backed the exchange rate the wrong way.NZ banks have also predicted higher interest rates when NZ rates have not increased, so this has lead to lower borrowing costs than expected, and higher profits.We have a world in recession and with recession comes uncertainty and higher bank margins to factor in the risk. Even Kiwibank margins grew with the higher risk. As yet NZ has had relatively few bad debts from the recession - ie higher profits. Kiwibank profits have also been up, so why didn't the Greens compare the overseas owned banks with Kiwibank? Why has the NZ dollar risen so much? One reason is that while the world has been uncertain with everything crumbling financially, NZ has been one of the more solid places to put money.Our export growth has been 11% during recession 2008-2011. Compare this to the Greens involvement during 2000-2005 where export growth was only 5% and didn't keep up with inflation - during boom years!The Greens believe with Labour that less real wages is better and will make things better for those on low incomes. Hence Labours calls to devalue our dollar, and relax the inflation targets of the reserve banks so they can give us large inflation to lower our current $13.50 min wage till its around $10 level - all this to lower real wages to make our exports more competitive? Obama doing the same with their print money scheme and thier min wage $7.25 US or around $9 NZ when ours 50% higher at $13.50!
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