NZ a “Cash Cow” for the Big Four Banks?

The big four Australian banks have been accused of treating New Zealand like “a cash cow.” That’s according to Sam Stubbs, a New Zealand player now trying to undercut Australian banks on home loans in New Zealand.

Though obviously self-interested, Stubbs’s claim is based on truth.

With the property price run-up in NZ before and since the start of the pandemic, banks operating in NZ have been making a return on equity of 18.4%. That’s second for banking profits in all developed countries, only behind banking profits in Canada of 20%

In the 2019 financial year, ANZ made A$3.6bn in Australia and $1.5bn in New Zealand. That’s despite having more than three times the customers in Australia.

The bank’s interest margin in Australia is 2%. That’s compared to 2.12% to home loan customers in New Zealand.

Now, in 2021, the bank has announced an NZ$1.92bn annual profit.

ASB Bank is run by Commonwealth Bank. The (so-called) National Australia Bank runs the (so-called) Bank of New Zealand. 

Maybe the better question, though, is who don’t they threat like a cash cow? The banks’ asset pool in Australia is enormous: together, they own just under $4 trillion in assets, more than double Australia’s entire annual national income.

The Big Four make up part of the ten corporations that Sam Dastyari warned in 2016 hold so much power and influence in Canberra that they have almost completely captured the democratic process.

In turn, the “Australian” banks are mostly owned by anonymous overseas capital: JPMorgan Nominees, Citicorp Nominees, HSBC Nominees and so on. In other words, those banks hold the shares in the Big Four “Australian” banks on behalf of wealthy individuals and trusts. 

As Finty commented, “Unfortunately, it is practically impossible to track down the identities of those underlying shareholders through the various financial structures that hold shares for each other and on behalf of each other.”

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