New Zealand Government to Probe Banking Competition

By Alice Uribe

New Zealand authorities have announced an investigation into profitability and competition in its banking sector amid concerns that lenders have made large profits while customers are managing cost-of-living pressures.

The country's cabinet has agreed to a market study on personal banking services to ensure New Zealanders know they can trust banks, Finance Minister Grant Robertson said Tuesday.

"There have been longstanding concerns that the market is not working well for New Zealanders. Banks have consistently made high profits over a number of years and their returns have outperformed their peers in other countries," he said in a statement.

New Zealand's banking sector is dominated by four banks, which Australia's major lenders own. ANZ Group and Westpac Banking have their own branded banks in New Zealand, while Commonwealth Bank of Australia owns ASB Bank and National Australia Bank owns Bank of New Zealand.

Together they make up around 85% of mortgage and other lending, and 90% of deposits, according to government data. By comparison, loans by smaller lenders are growing but remain small.

"There has not been an in-depth look into competition issues in New Zealand's banking for some time, and New Zealand lags other countries such as Australia and the U.K. into doing a detailed analysis into banking service," Robertson said.

"I want to be clear this study is not about bank conduct and culture."

The Commerce Commission market study, to be completed by August 2024, will determine any actions needed to ensure competition is working for bank customers, authorities said.

A preliminary issues paper will be released in August this year, which will set a clear signal of direction for the study, they said.

Write to Alice Uribe at alice.uribe@wsj.com

(END) Dow Jones Newswires

June 20, 2023 01:23 ET (05:23 GMT)

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