New Zealand orders investigation into banking sector over competition concerns

New Zealand will conduct a survey to assess competition in the country's banking sector, with a focus on services in rural areas, Finance Minister Nicola Willis said on Wednesday.

The move follows a draft report released in March by the country's competition watchdog which found New Zealand's big four banks offered only limited competition in retail banking and that a focus on maintaining profit margins had led to a lack of investment in technology and low levels of innovation. .

The four largest banks in New Zealand – ANZ New Zealand, ASB Bank, Bank of New Zealand and Westpac New Zealand – are owned by Australia's “big four” banks. These loans represent about 85% of real estate and other loans, and about 90% of deposits, according to official data.

“Promoting strong competition in the banking sector is essential to rebuilding the economy,” Willis said in a statement.

Parliament's Finance and Expenditure Committee will lead the investigation and will work with an agriculture-focused committee to define the scope of the investigation and prepare a report on rural banks.

“Growing the rural economy is key to rebuilding the New Zealand economy. With farmer satisfaction with banking services declining in recent years, it is essential that we better understand the role of competitive banking,” Mr Willis said.

She added that the Finance Committee will listen to the banks’ proposals and may ask bank presidents and CEOs to appear before it.

New Zealand's agricultural sector represents 11% of the country's bank loans, according to a central bank report issued last year.