BNZ Bosses Grilled By Banking Inquiry

BNZ’s dirty laundry was publicly aired yesterday as members of Parliament’s banking inquiry grilled the bank’s CEO and chair on some of their more unsavoury lending practices.

Earlier in the day Federated Farmers had sounded the alarm about the risk of banks defunding petrol stations by 2030 as part of their commitment to the Net-Zero Banking Alliance.

Federated Farmers has also lodged a formal complaint with the Commerce Commission about potentially anti-competitive, coordinated, cartel-like behaviour from the big banks.

"That seemed to have caught the attention of the select committee because it became a real line of inquiry they pursued," says Federated Farmers banking spokesperson Richard McIntyre.

"Federated Farmers has raised some fair questions about the future of the rural petrol stations our communities depend on, and whether farmers could expect similar treatment soon.

"Unfortunately, all we got in response from BNZ’s CEO when questioned yesterday was nothing but total BS - banking spin - that I’m not even sure he believed himself."

BNZ denied their decision to de-bank petrol stations was driven by their emissions reduction targets or the bank’s involvement with the Net-Zero Banking Alliance.

This is despite the fact the Net-Zero Banking Alliance is clearly referenced in BNZ’s internal policies and communications with petrol station owners.

"It was really a credit decision for us. We’ve looked at our exposure to petrol stations," BNZ CEO Dan Huggins told the committee.

"Then we look at the long-term future of those businesses, recognising that we would expect that we’re going to see conversion to electric vehicles demand change for fuel services."

But as of 2023, plug-in electric vehicles made up only 2.2% of New Zealand's national vehicle fleet.

"That’s absolute nonsense and a complete cop-out from BNZ, who are trying to justify an unjustifiable decision they know will be incredibly unpopular with most Kiwis," McIntyre says.

"Yes, electric vehicle numbers are slowly increasing, but in reality, the vast majority of New Zealanders will still be driving petrol or diesel vehicles come 2030 and beyond."

McIntyre says that’s particularly true for farmers and remote rural communities, where petrol stations are a vital lifeline and provide an important service.

"It’s not just farmers who depend on these small rural petrol stations. It’s families trying to get their kids to school, local businesses, contractors, freight and tourists too."

Last year BNZ’s chief sustainability officer Rebekah Cain participated in a podcast with interest.co.nz on the bank’s involvement with the Net-Zero Banking Alliance.

"If you fund it, it happens; if you don’t fund it, it doesn’t happen," she said at the time.

"I think that’s the exact mentality we’re seeing on full display now," McIntyre says.

"BNZ are effectively de-funding petrol stations despite the huge implications for everyday New Zealanders.

"If the Net-Zero Banking Alliance has nothing to do with the bank’s decision, then I want to know why it’s mentioned in their internal policies and communications with petrol station owners.

"If it is simply an issue of risk, the normal response would be for the bank to require the borrower to have more equity and perhaps pay a slightly higher interest rate.

"Completely de-banking someone is only something you do if you are more concerned about reducing so-called financed emissions.

"I don’t think these guys are fooling anyone with their responses."

The banking inquiry also grilled BNZ on their lending to farmers, with the bank claiming they have plenty of capital available to lend to farmers, but there just wasn’t enough demand to take it up.

"That sounds like a competition issue to me, because there are plenty of farmers out there looking for access to capital to grow their businesses," McIntyre says.

"If BNZ aren’t seeing demand for that capital, they can’t be putting up a competitive enough offer. That really speaks to the way farmers perceive them and the service they provide."

Federated Farmers’ latest banking survey, released earlier this week, shows BNZ offers the highest interest rates for farmers among the major banks.

The survey also shows BNZ ranks the highest for perceived undue pressure on farmers, and has the lowest customer satisfaction score.

"Farmers want a bank they know will have their back when times are tough; not back them into a corner when they’re hit with a drought or a market downturn.

"Federated Farmers are calling on BNZ to immediately withdraw from the Net-Zero Banking Alliance."

Federated Farmers’ full complaint to the Commerce Commission can be found - here.

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