Jamie Mackay: The Country host on the Reserve Bank's decision to review bank capital rules

The Reserve Bank's move to review banking capital rules has been welcomed by Federated Farmers.

Banking spokesperson Mark Hooper says the stricter rules make it difficult for farmers to borrow money - and these changes will make things fairer.

The Country's Jamie Mackay explained further.

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Episode Transcript

Speaker 1 (00:01):
The Rural Report on hither do for Cee Allan Drive
ha seen past six and Jamie mckaye, Host of the
Countries with us Helo Jamie Good. So Federated Farmers like
the fact that the Reserve banks having a look at
those bank capital rules.

Speaker 2 (00:15):
Yeah, yeah, exactly. I mean I think Adrian Or's respra
old Adrian, He's right in the firing line at the moment,
isn't he? He was responsible for this one or it
certainly happened under his watch that banks had to require
enough capital to withstand a one and two hundred year shock.
And I guess the double whammy for the likes of

(00:35):
the farmers was they had to hold twice The banks
had to hold twice as much capital for rural lending
as they did for residential on heather. There's a real
irony in that. At the moment is Auckland and Wellington
house prices fall and probably becoming risky investments compared to
farm prices that are going up. So yeah, the Federated

(00:57):
Farmers banking guy Mark Cooper has taken from Richard McIntyre
both Calcock. He's both done a really good job on this.
The feed save in fact, and they're glad that they've
got this through or it's going to be looked at. Look.
I think the biggest surprise for me, Heather, was yesterday
morning when the PM was talking to Mike Cosking and

(01:18):
he was, you know, putting his ore or putting a
spanner in the works. Almost there, and he's on my
show tomorrow. I'm going to ask him this. Did he
did he overstep the mark? I mean, good on him.
I think he's exactly right. But it's meant to be
the Reserve Banks meant to be an independent entity. And
maybe the Prime Minister got into their air and shoot
at big time knows who knows?

Speaker 1 (01:39):
Hey, how good is this price looking now that the
Bager group have settled.

Speaker 2 (01:44):
Well, it was what about three point eight four billion,
which is a hell of a lot of money. It's
now four point two two billion. I heard you talking
about it. I think between four and five Heather. Yes,
So they got the licenses, they agreed on that one.
It's great. The font are still targeting, by the way,
a capital return of two dollars per share for the

(02:05):
Farmer shareholders. So of that four point two billion, three
point two billion of it will be a capital distribution
providing of course the farmer shareholders vote for it, and
turkeys don't vote for an early Christmas in the fight.
That's not a good example, and the farmers will be
thinking I'm calling them turkeys there, but complete, the complete,

(02:26):
the opposite. This is Christmas for the farmers, and I
know that theoretically some of them are saying, look, we
should be keeping our consumer brands. But you'd have to
back Miles Hurr or Peter McBride and the team at Fonterra.
They're doing a pretty good job. This three point two billion,
A lot of it will go to paying down debt.
Remember that even though the shares were trading up to

(02:47):
six bucks today, some of those farmers bought shares six
or seven or even eight dollars when they picked. So
they're going to pay down a bit of debt. But
also I think there's a lot of pent up capital
expenditure that needs to happen on farms, talking about replacement tractors,
maybe capital fertilizer. You combine that with lower interest rates

(03:07):
and better returns, and I think this farming season twenty
five twenty six is going to be a ripper.

Speaker 1 (03:14):
Have you figured out how much you're going.

Speaker 2 (03:15):
To get we you mean me a dairy farmer. Well, Heather,
I'll let you in on a week secret. I'm in
an equity partnershops, so I'm only one vote in six
back in the day and I voted the other way,
but you've got to go with majority. We sold our
Fonterra shares and we supply Open Country and honestly, Open

(03:40):
Country a very good company to supply as well.

Speaker 1 (03:44):
Watertime, Jamie, thank you very much, appreciate it. Jamie McKay,
Host of the Country.

Speaker 2 (03:48):
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