December 17, 2025 • 4 mins
There's hopes a new move by the Reserve Bank will bring about positive changes for New Zealand's banking sector.
It is changing the mix of capital banks are required to hold, aiming to reduce funding costs.
It is also targeting closing the gap between bigger and smaller banks - making the market more competitive.
The Co-Operative Bank chief executive Mark Wilkshire says this will encourage competition and remove certain constraints impacting the banking sector.
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Speaker 1 (00:09):
You're listening to a podcast from NEWSTALKSEDB. Follow this and
our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Speaking of the Reserve Bank, they are changing some banking
rules and there is just a glimmer of hope that
it might result in lower mortgage rates for all of us,
So we're interested in this. Banks will no longer be
required to hold as much capital in case they run
into trouble, get into a tight spot. Those were the
rules that Adrian or put in place. You'll remember it
was for a worst case scenario, but the result was
(00:39):
higher funding costs for banks, which they've been telling us about,
worse competition for customers. Mark Wiltshire is the chief executive
at the Cooperative Bank and joins me this evening, Mark,
Good evening.
Speaker 3 (00:50):
Good evening, Ryan.
Speaker 2 (00:51):
So how does this change affect the Cooperative Bank or
does it?
Speaker 3 (00:55):
Yeah, it does a couple of things. Really, it's good
news for smaller banks. It basically lowers the amount of
capital you have to set aside in case of emergency.
So you want banks to hold some capital, but too
much as a drag and a cost and a constraint
on getting out there and competing for customers. So you
want to encourage competition, So for us, it allows us
(01:17):
takes that constraint away by lowering that amount of capital
so we can get out there and have more appetite
for growth.
Speaker 2 (01:23):
The total is three point four billion less. I'm told
how much less would the co op Bank need to
or be required to hold.
Speaker 3 (01:31):
Yeah, it's quite significant. So in percentage terms, the old
rate was about seventeen percent of the capital ration and
it drops down to fourteen, so quite a significant reduction
for us. We'll run the numbers on exactly where we
want to land because we do our own assessment as well.
Now we've got this, but that lower minimum is a
big help.
Speaker 2 (01:51):
Does it and does it mean that the system is
more risky?
Speaker 3 (01:56):
No, I think it's achieving the right balance and they've
aligned this with Australia as well, very consistent with the
APPA rules. So they were pretty high before, so I
think they've come back to a better at a level.
And it's that balance of you want resilience, but you
don't want to be too much of a cost that
gets passed on to customers. So this should flow through
(02:17):
to customers by allowing more competition and allowing particularly domestic
banks to challenge more.
Speaker 2 (02:23):
So, Yeah, on does that mean Mark that we will?
Does it benefit smaller banks more so than the bigger
Australian ones or is it everybody's on an even keel.
Speaker 3 (02:32):
It does benefit the overall the total market, but I
think it particularly benefits the smaller banks. Not everyone will
be happy, but for us, we think it's a really
good positive step and we certainly think it benefits us
materially and allows us to actually go out there and
grow our mortgages more and compete harder for those mortgages.
Speaker 2 (02:50):
Are you going to get When you say compete, do
you mean you'll give us cheaper mortgage rates? Mark?
Speaker 3 (02:55):
Yeah? I mean you've got to take into account other
things like the overallrace environment at any point in time.
But it does mean you're taking away some of that
cost when you factor' ed into your pricing decisions. So
you know, it's we're in a slightly right rate environment
right now, but now we've hit the largely hit the
bottom from expectations, so it doesn't necessarily immediately translate through
(03:16):
to the rates today, but it will have that effect overall.
Speaker 2 (03:19):
Speaking of the increase in rates, we've seen some banks
move some haven't you guys have moved on that and
does what Arna Brennan say said the other day, does
that have any impact on you?
Speaker 3 (03:29):
It had a bit, so it took a little bit
of the heats, but not a lot. So you know,
we passed on about half of what those health our
rates were rising. They moved up fifty to sixty points.
They came back a little bit, but really only at
the margin. So we've passed on about thirty points onto
customers for fixed rates. And that's really important to signal
to customers that rates are starting to move up in
(03:50):
those longer terms, but still offering a really good committive
rates at the short terms as well.
Speaker 2 (03:54):
Does that mean in your eyes for those longer term
rates the only way they are going from here now
is up.
Speaker 3 (04:03):
Well, that's what the market is pricing. And so for
banks to offer fixed rates and certainty for customers, they
have to hedge those in the interest rate mark and
those interest rate markets look at the longer term signals,
so they're not looking at what happened in November. They're
looking at what's happening in two to three years time.
So that outlook is increasing now and certainly the commentary,
and the outlook was for that to start increasing. So
(04:25):
that's why the longer term rates are starting.
Speaker 2 (04:26):
To each up.
Speaker 3 (04:28):
So I think if we're not at the bottom, we're
somewhere close to it, and we'll wait and see whether
there's another ocr cat or not. Certainly the new Reserve
Bank governor has left that door open. But we're somewhere
near the bottom of that cycle, so the longer term
outlooks up.
Speaker 2 (04:43):
Mark, appreciate your time. Thank you very much for being
with me. Mark Wiltshire, who's the TV executive at the
Cooperative Bank.
Speaker 1 (04:49):
For more from News Talks b listen live on air
or online, and keep our shows with you wherever you
go with our podcast on iHeartRadio.
You're listening to a podcast from NEWSTALKSEDB. Follow this and
our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Speaking of the Reserve Bank, they are changing some banking
rules and there is just a glimmer of hope that
it might result in lower mortgage rates for all of us,
So we're interested in this. Banks will no longer be
required to hold as much capital in case they run
into trouble, get into a tight spot. Those were the
rules that Adrian or put in place. You'll remember it
was for a worst case scenario, but the result was
(00:39):
higher funding costs for banks, which they've been telling us about,
worse competition for customers. Mark Wiltshire is the chief executive
at the Cooperative Bank and joins me this evening, Mark,
Good evening.
Speaker 3 (00:50):
Good evening, Ryan.
Speaker 2 (00:51):
So how does this change affect the Cooperative Bank or
does it?
Speaker 3 (00:55):
Yeah, it does a couple of things. Really, it's good
news for smaller banks. It basically lowers the amount of
capital you have to set aside in case of emergency.
So you want banks to hold some capital, but too
much as a drag and a cost and a constraint
on getting out there and competing for customers. So you
want to encourage competition, So for us, it allows us
(01:17):
takes that constraint away by lowering that amount of capital
so we can get out there and have more appetite
for growth.
Speaker 2 (01:23):
The total is three point four billion less. I'm told
how much less would the co op Bank need to
or be required to hold.
Speaker 3 (01:31):
Yeah, it's quite significant. So in percentage terms, the old
rate was about seventeen percent of the capital ration and
it drops down to fourteen, so quite a significant reduction
for us. We'll run the numbers on exactly where we
want to land because we do our own assessment as well.
Now we've got this, but that lower minimum is a
big help.
Speaker 2 (01:51):
Does it and does it mean that the system is
more risky?
Speaker 3 (01:56):
No, I think it's achieving the right balance and they've
aligned this with Australia as well, very consistent with the
APPA rules. So they were pretty high before, so I
think they've come back to a better at a level.
And it's that balance of you want resilience, but you
don't want to be too much of a cost that
gets passed on to customers. So this should flow through
(02:17):
to customers by allowing more competition and allowing particularly domestic
banks to challenge more.
Speaker 2 (02:23):
So, Yeah, on does that mean Mark that we will?
Does it benefit smaller banks more so than the bigger
Australian ones or is it everybody's on an even keel.
Speaker 3 (02:32):
It does benefit the overall the total market, but I
think it particularly benefits the smaller banks. Not everyone will
be happy, but for us, we think it's a really
good positive step and we certainly think it benefits us
materially and allows us to actually go out there and
grow our mortgages more and compete harder for those mortgages.
Speaker 2 (02:50):
Are you going to get When you say compete, do
you mean you'll give us cheaper mortgage rates? Mark?
Speaker 3 (02:55):
Yeah? I mean you've got to take into account other
things like the overallrace environment at any point in time.
But it does mean you're taking away some of that
cost when you factor' ed into your pricing decisions. So
you know, it's we're in a slightly right rate environment
right now, but now we've hit the largely hit the
bottom from expectations, so it doesn't necessarily immediately translate through
(03:16):
to the rates today, but it will have that effect overall.
Speaker 2 (03:19):
Speaking of the increase in rates, we've seen some banks
move some haven't you guys have moved on that and
does what Arna Brennan say said the other day, does
that have any impact on you?
Speaker 3 (03:29):
It had a bit, so it took a little bit
of the heats, but not a lot. So you know,
we passed on about half of what those health our
rates were rising. They moved up fifty to sixty points.
They came back a little bit, but really only at
the margin. So we've passed on about thirty points onto
customers for fixed rates. And that's really important to signal
to customers that rates are starting to move up in
(03:50):
those longer terms, but still offering a really good committive
rates at the short terms as well.
Speaker 2 (03:54):
Does that mean in your eyes for those longer term
rates the only way they are going from here now
is up.
Speaker 3 (04:03):
Well, that's what the market is pricing. And so for
banks to offer fixed rates and certainty for customers, they
have to hedge those in the interest rate mark and
those interest rate markets look at the longer term signals,
so they're not looking at what happened in November. They're
looking at what's happening in two to three years time.
So that outlook is increasing now and certainly the commentary,
and the outlook was for that to start increasing. So
(04:25):
that's why the longer term rates are starting.
Speaker 2 (04:26):
To each up.
Speaker 3 (04:28):
So I think if we're not at the bottom, we're
somewhere close to it, and we'll wait and see whether
there's another ocr cat or not. Certainly the new Reserve
Bank governor has left that door open. But we're somewhere
near the bottom of that cycle, so the longer term
outlooks up.
Speaker 2 (04:43):
Mark, appreciate your time. Thank you very much for being
with me. Mark Wiltshire, who's the TV executive at the
Cooperative Bank.
Speaker 1 (04:49):
For more from News Talks b listen live on air
or online, and keep our shows with you wherever you
go with our podcast on iHeartRadio.
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