Hon David Cunliffe
Finance Spokesperson

9 June 2009 Media Statement

Banks slammed in Select Committee report

In a rare move, Parliament’s Finance and Expenditure Committee (FEC) today issued a hard hitting and bipartisan report criticising the New Zealand banking sector, Labour Finance spokesman David Cunliffe said today.

“The report reflects strong and growing concerns across Parliament that banks have not fully passed on interest rate cuts and may not be appropriately sharing the burden of the recession,” David Cunliffe said.

The FEC report noted the “failure” of some banks to pass on cuts to the Official Cash rate (OCR) and calls on future cuts to be passed on to the “maximum extent possible”.

The report expresses “surprise and concern” that some longer term mortgage rates had indeed risen.

“Despite the severe recession, banking profits were almost unchanged – that does not appear to reflect a fair burden of adjustment,” David Cunliffe said.

The FEC Report states that it is “vital that banks neither insulate their profit margins nor charge excessively high interest rates at the expense of the real economy and taxpayers”.

“Australasian banks must extend fair and equal lending terms to New Zealand companies relative to their Australian equivalents,” David Cunliffe said.

“It is essential that, when the major banks made around $2.5 billion of profit in New Zealand last year, and have benefited from government guarantees of wholesale and retail lending, they display good corporate citizenship at all times.

“Kiwis believe in a fair go for all but will not stand for being ripped off.

“Today’s report is a strong bipartisan statement of concern that the banking sector would do well to heed,” David Cunliffe said.

ENDS

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