Tuesday 4th December 2012
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Reserve Bank governor Graeme Wheeler has scotched claims by the Green Party that he has a bias in favour of the country's Australian-owned banks, and defended statements saying the lenders' return on equity is still below pre-crisis levels.
Wheeler, who delivers his maiden monetary policy statement on Thursday, released bank profitability figures given to the Greens, which he used to support comments before Parliament's finance and expenditure committee that bank profits were "about average or below" other developed nations. Greens co-leader Russel Norman accused Wheeler of misleading Parliament over the claim, which isn't directly addressed in the RBNZ statement.
Wheeler released charts showing New Zealand's banks' after-tax return on assets and equity between 2009 and 2001 was in the bottom half of OECD countries, excluding the euro-area. Pretax returns show New Zealand lenders' returns in the top six for the period. The comparisons aren't clean-cut with some countries shown as before tax, and others after tax.
"My response to the select committee represented my understanding of the information available at the time," Wheeler said in a statement. "Our analysis was completed after the hearing and we released to the Green Party in response to their request which followed the hearing."
The Nov. 7 select committee hearing on the central bank's financial stability report was Wheeler's first appearance before politicians, and degenerated into a farce when the governor, his entourage, and everyone else were cleared from the room so MPs could argue about whether they could seek more time after a late start.
Wheeler refuted the Greens' claim the central bank is biased towards the Australian lenders, saying the bank "takes seriously its mandate from Parliament to supervise the New Zealand banking system and does so without favour."
The Australian lenders' profitability has recovered on a return on assets basis, but was still below pre-global financial crisis levels as a return on equity, Wheeler said.
"That's partly because these banks are building up capital as part of the tougher Basel III regulatory requirements," he said.
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