The New Zealand Government has voted $NZ78 million ($A63 million) for the establishment of a new People’s Bank. It will be run by the government-owned NZ Post and will offer personal banking services such as credit cards, mortgages, telephone and internet banking, but will not be offering banking services to small business, farmers or the corporate sector.
Its fee charges are expected to be 30 per cent below that of other banks.
Some NZ credit unions are concerned that the narrow focus of the new “My Bank” will mean that it will largely be in competition with them, rather than with the major banks.
Hence the big question is, will this be just the start?
In the face of opposition from the other major banks, all of which are foreign owned, will the new People’s Bank eventually expand into services for small business and farmers?
Surveys show that for 17 per cent of New Zealanders, it will become their primary bank, while another 24 per cent say they will use some of its services.
The driving force behind the new bank has been the Deputy Prime Minister, Jim Anderton.
He was suspended from the NZ Labour Party parliamentary caucus in 1988 for abstaining on the vote to sell the Bank of New Zealand, which was eventually bought by the National Australia Bank (NAB).
Soon after he left the Labour Party and formed his own party, the Alliance.
Labour was ousted at the next election and only regained power with the help of the Alliance in 1999.
Ironically, 13 years later it is his Alliance and the Labour Party which have created the new bank.
New Zealand’s banking sector is dominated by the big four Australian banks. They have refrained from attacking the People’s Bank in the face of their own unpopularity among the population, and of strong criticisms of their behaviour from the NZ government.
Since 1993, bank branches have falling from 1,510 to 866. It is estimated that commercial and business bank charges have risen nearly 30 per cent over that period.