(Bloomberg) -- The New Zealand government should look at providing state-owned Kiwibank with access to more capital so that it becomes a disruptive competitor in the banking sector, the antitrust watchdog said.
The nation’s four largest banks, which are all Australian-owned, do not face strong competition when providing personal banking services, the Commerce Commission said Tuesday in Wellington in a final report on the sector.
“No new entrants have been able to meaningfully increase the competition faced by the major banks since the establishment of Kiwibank in 2001,” the report said. “Kiwibank imposes some constraint on the major banks but lacks the scale and capital backing to consistently drive stronger competition.”
The Commission recommended the government consider ways to capitalize Kiwibank, saying in the shorter term it appears to have the greatest potential to provide the sector “with the disruptive maverick that’s currently missing.” In the longer term, it encouraged the government to be an early adopter of open banking, saying this could be a “game changer.”
Former Finance Minister Grant Robertson announced the inquiry in June last year following suggestions that the main lenders were making excessive profits at a time when New Zealanders were facing increasing living costs.
The four big banks are Australia & New Zealand Banking Group Ltd., Westpac Banking Corp., Commonwealth Bank of Australia’s ASB Bank and National Australia Bank Ltd.’s Bank of New Zealand.
“Competition isn’t working as it should in this sector, and Kiwi consumers are missing out as a result,” the Commission said.
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