Aussie banks make record profits (and send them offshore)

2 November 2011

Aussie banks continue to post record profits (and send them offshore)

Record bank profitability and dividend payments of our overseas-owned banks highlights an on-going structural weakness in our economy, said Green Party Co-leader Dr Russel Norman today.

Dr Norman was responding to the posting of strong full-year profit results from Australian-owned ASB, BNZ, and Westpac banks over the last week. Westpac New Zealand announced cash earnings were up 41 percent to $454 million today, a majority of which will be paid out to its parent company in Australia.

“These are very good times for our big four Australian-owned banks, despite the weak economy," said Dr Norman.

“ASB, ANZ, BNZ, and Westpac have collectively sent $8.9 billion out of the country in the form of dividend payments to their parent banks in Australia over the last five years.

“This capital out-flow is unsustainable for New Zealand Inc. and highlights the urgent need for greater local ownership of our banks.

“Only one bank — Kiwibank — approaches anything like a suitable rival to the big four Australian banks, but it controls just 2.5 percent of total banking assets compared to 90 percent controlled by the Australian-owned banks.

“It's not in New Zealand's economic interest to remain a wholly-owned subsidiary of the Australian banks," Dr Norman said.

Last month, Dr Norman questioned Finance Minister Bill English directly about the high level of foreign ownership of our banking sector through parliamentary questions. In response, the Minister said, “The high level of foreign ownership has been an enduring feature of the New Zealand banking system for many years and of itself is not a source of concern.”

“Once again, we see a National Government without a plan to shift our economy onto a more sustainable footing,” said Dr Norman.

“The National Government is happy for the New Zealand economy to remain a cash cow for our Australian banks.”

The Green Party’s plan for the economy involves strengthening Kiwibank through dividend retention and capital injection so that it can effectively compete with the big four Australian banks. The role of the other New Zealand-owned banks, building societies, and credit unions is also important.

“The Government needs to invest further into Kiwibank to bring it up to the point where it can compete effectively with the big four Australian-owned banks,” said Dr Norman.

Link to further details of the Green Jobs Initiative: www.greens.org.nz/greenjobs

ENDS

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