Kiwibank advocates for a fairer playing field for all banks

Kiwibank’s submission to the parliamentary select committee inquiry into banking competition highlights the significant challenges it faces under the current regulatory framework. As the inquiry progresses, Kiwibank is committed to advocating for changes that will foster a more competitive and equitable banking environment in New Zealand.

Kiwibank welcomes Finance Minister Nicola Willis’s commitment to issuing a new Reserve Bank of New Zealand (RBNZ) Financial Policy Remit aimed at supporting a more competitive banking sector. It believes that the current settings of the RBNZ, while important for financial stability, need to be balanced with the need for competition and innovation.

RBNZ requires all banks, regardless of size, to hold enough capital to withstand a 1:200-year stress event. This uniform requirement disproportionately affects smaller banks, hindering their competitiveness, despite the vastly different consequences for New Zealand if a small bank fails compared to a large bank.

“What’s very difficult to reconcile is why Kiwibank, for example, is required to hold so much more capital compared to one of the four larger banks for the same risk. It’s like a high-school rugby team going up against the All Blacks, and you give the All Blacks a 20-point head start. We are committed to working with the government and RBNZ to create a fairer playing field for all banks, and in turn keeping the market competitive for consumers,” said Steve Jurkovich, Kiwibank Chief Executive.

Kiwibank further advocates for a regulatory framework that is proportionate and supports smaller banks. Smaller banks are required to implement the same level of regulatory change as larger ones, but from a smaller resource pool. Simplifying regulations would enable Kiwibank and smaller banks to compete more effectively and contribute to a more dynamic and competitive banking sector by allowing resources to be focussed on innovation.

“Kiwibank was established with the vision of offering New Zealanders a genuine alternative to the major banks. We are focused on continuing to rise to that challenge and live up to our Purpose of Kiwi making Kiwi better off. We look forward to appearing before the select committee and continuing to drive changes that will benefit all New Zealanders,” says Mr Jurkovich.