New Zealand’s government is set to announce an inquiry into its banking sector amid concerns that lenders are making excessive profits.
(Bloomberg) — New Zealand’s government is set to announce an inquiry into its banking sector amid concerns that lenders are making excessive profits.
Ministers will announce Tuesday in Wellington that they have asked the antitrust watchdog Commerce Commission to undertake a market study into the sector, local media reported. Confirmation is expected after midday local time.
Former Prime Minister Jacinda Ardern first flagged government concerns about bank profits and fees in November, suggesting that lenders needed to reflect on their behavior and commitment to their communities at a time when many of their customers were facing a surging cost of living. Her successor Chris Hipkins reiterated in May that his government remained concerned about the level of bank profits.
The country’s four largest banks are all Australian-owned. Westpac New Zealand reported a net profit of NZ$1.05 billion ($650 million) for the year through Sept. 30, up 12% on a year earlier, while ANZ Bank New Zealand posted a net profit of more than NZ$2 billion for the same period.
“Are they demonstrating social license, are they demonstrating a commitment to the communities that they’re serving by taking profits such as those in these current times?” Ardern said in November.
The Commerce Commission undertakes market studies at the request of the government. The studies look at factors affecting competition for particular goods or services, to find out how well competition is working and whether it could be improved, the regulator says on its website.
The commission has conducted studies into residential building supplies, retail grocery and retail fuel. Each of those reviews took 12 months or more to complete, suggesting any assessment of the banking sector won’t be available until after the Oct. 14 general election.
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