The Productive Economy Council supports Dr Bollard's call for banks to stop gouging.

Bank gouging continues says Productive Economy Council (PEC) spokesperson Selwyn Pellett and it must stop.

"Are we happy as a country that the top four banks make more profit than the entire NZX 50 put together and at the very least shouldn't one of those banks be locally owned?" asks Pellett.

Not only are banks not passing on the OCR reductions but they are now manipulating the behaviour of their clients by talking up long term interest rates and thus signalling that further interest rate cuts are unlikely.

Reserve Bank Governor Alan Bollard has already said that "in these circumstances we believe the rise in longer-term interest rates is unwarranted and inconsistent with the monetary policy outlook".

Pellet says the PEC goes further than Dr Bollard, charging the banks with causing damage to the economy to strengthen their balance sheets simply because they can.

"The Minister of Finance has instructed the banks to pass on reductions. The Prime Minister has requested ?honourable' behaviour. Dr Bollard has warned them not to underestimate the amount of anger out there in the business community, yet the banks have ignored them all. The gouging continues and the banks' margins increase completely unchecked," he says.

"At a time when we really need ?our' bankers to be doing their bit to help the economy, we are clearly discovering that they are not ?our' bankers at all. Home country bias seems to be affecting the decision making of the banks here and that's not in our national interest," says Pellett.

"Yes, we must face a slightly higher risk premium, since our foolish property policies have left us one of the most indebted countries in the world, but that margin should be small compared with what we are paying now," he says.

Pellet says that our only New Zealand-owned bank (Kiwi Bank) has its hands tied right now due to lending ratios. But if its owners, the New Zealand Government would inject some fresh capital into it then we might be able to create some positive tension in the business lending market and see some realistic pricing.

The PEC believes it's time we moved to regain economic sovereignty, which we have clearly lost.

"We have a bank that can address the home country bias and it should be recapitalised now to allow a fair fight and allow our productive companies to get the funding they need at a price they can afford."

"A continued failure to address bank gouging will result in ever more job losses and company failures," says Pellett.

The Productive Economy Council

The Productive Economy Council represents a growing community of people that wish to see New Zealand return to the upper end of the OECD in terms of GDP per capita. It was founded by four of the former Trustees of the Hi Growth Project including: current President of the Hi Tech Association Wayne Norrie; former executive of the Hi Growth Project, Garth Biggs; Former Chairman of the Hi Tech Association and entrepreneur Selwyn Pellett; and APEC Business Advisory Council, Co-chair Technology & Information Working Group, John Blackham.

ENDS

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