Friday 20 November 2009

Like hell it's a kiwi bank

by John Minto
12 November 2009

The other night when I went out to get an ice-cream at a local dairy I was gobsmacked to be confronted with a wall of huge yellow advertising posters with heavy black lettering – “We’ve been a KIWI BANK since 1847” with the ASB logo at the bottom. What a brazen lie – like hell it’s a kiwi bank.

Back in the 1980s when it was a respected trustee bank, owned by its New Zealand account holders and serving their interests, it could legitimately make the claim. But in 1989 it was privatised and like our other big three banks – ANZ National, BNZ and Westpac – it’s owned by Australians.

And with the shift to private shareholder ownership the ASB’s first priority has changed to delivering dividends to its shareholders rather than service to its customers. No wonder the big four banks score so lowly in customer satisfaction surveys. The only thing keeping them going is the huge hassle and extra expense involved in changing banks. Without customer inertia these banks would be run out of town.

It’s no surprise to find yesterda'ys release of the multi-party Parliamentary Banking Inquiry’s report confirms the big banks did not pass on the full effect of reductions in the Official Cash Rate to New Zealanders in recent times. More billions into the banker’s coffers.

They have all been guilty of various customer and taxpayer rorts and have acted more like a cartel than competing businesses.

It’s not just the exorbitant fees and unjustified charges for all sorts of normal customer services but they have actively targeted their customers to go further into debt and have put a lot of pressure on bank employees to sell more debt to indebted customers.

They openly mocked Finance Minister Michael Cullen’s attempts to reduce lending for investment properties and will continue to undermine any government initiative which gets in the way of increasing their profits.

In most years these banks have taken $2 billion in profit across the ditch and we wonder why our current account deficit is so high.

And then there are the tax evasion cases where the High Court has found the banks guilty of screwing taxpayers through structured financial transactions which have been described as a sham to avoid tax.

The ASB owes us $280 million while the others (Westpac $961 million, ANZ National $562 million, BNZ $661 million) are even worse. It’s an appalling abuse - together these banks owe $500 in unpaid tax for every person living in New Zealand.

With such well-deserved bad publicity the banks are going on a charm offensive. As well as the ASB bank’s attempt to resurrect a nostalgic kiwi connection from its arrogant abuse of customers and taxpayers, the misnamed BNZ announced last week it was “Closed – for good” If only.

Most of the bank staff were out doing work in the community for a day to show what a good corporate citizen the bank is. The BNZ PR machine was working well because our local suburban newspaper (and I’m sure this was repeated throughout the country) had a story showing bank staff working hard clearing land for a garden for the families of cancer sufferers here in Auckland.

“Banks just genuinely believe that we need to be part of the community” said BNZ head of external communications Diana Maxwell.

She says the BNZ accepts there has been a loss of customer trust in the big banks “and we need to work hard to rebuild that trust”. They could start by paying back the $661 million they owe and apologising for their bad behaviour.

The latest charm offensive is just company spin. Former BNZ boss and now chief executive of BNZ parent bank, the National Australia Bank says the current hostility towards the major Australian banks is not tenable for viable businesses.

That’s the reason for the charm offensive – nothing to do with any genuine belief about needing to be part of the community.

Our economy has lots of parasites feeding on the wealth created by others. The ASB and its Aussie mates are the biggest bludgers.

I’m pleased these banks are having a harder time and I hope their spending of millions to buy kiwi goodwill is a failure.

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