Claire Matthews: Massey University banking expert on the Government critiquing the banks' withdrawal of lending to petrol stations

The Prime Minister has taken aim at the chief executives of New Zealand’s largest banks saying it was 'utterly unacceptable' that some were withdrawing banking services from petrol stations and mines.

Chris Luxon joined Mike Hosking earlier today to explain that the banks needed to keep funding businesses Kiwis need to keep moving forward - and expressed concern at rural petrol stations in particular losing their funding.

Massey University banking expert Claire Matthews says the Government has the option to put regulations in place to reverse these changes - but warned this choices comes with consequences. 

"If the Government starts telling the banks what they have to do, then it's very much open to the banks to say - actually, it's too complicated, you're dictating too much what we can and can't do... the reality is, the New Zealand market is not that important to us, we're going to withdraw."

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Episode Transcript

Speaker 1 (00:00):
Now it's time for banking. The Prime Minister has joined
the Shane Jones chorus of banking critics, suggesting the government
will soon look to make banks lend to customers that
they don't want to lend to.

Speaker 2 (00:10):
It's utterly unacceptable, utterly unacceptable, and that's what we've got
to change. And we've made it very clear in our
comments and I hope the bank CEOs are noticing our language,
which is you've got to finance things that Kiwis need
and not financing service stations or coal companies. Those are
things that the Zealan needs. And so whether it's been
the benzed On service stations or any of the other banks,
their job is not politically posturing. Their job is to

(00:32):
finance the things that Kiwis need. They don't want this
political posturing going on bn Zen, you know they want
to not fund service stations in provincial New Zealand for example. Well,
we've got two to three percent electric vehicle penetration at
the moment. It ain't going to change in a hurry,
and frankly that's not their decision.

Speaker 3 (00:46):
Now.

Speaker 1 (00:46):
The Prime Minister is using some rhetoric here, but he
hasn't actually said he's going to change the law. However,
there are some who think you might be edging towards it.
If Shane Jones has a private member's bill, will that
be enough? Clear Matthews? Is the massive university banking expect clear,
good evening plan? Can the government force banks to Can

(01:09):
you regulate and say you have to take this customer
or that customer?

Speaker 3 (01:14):
Absolutely, if the government wants to put regulation in place,
that is an option available to them. But I would
caution them to think about what are the unintended consequences
of doing that.

Speaker 1 (01:26):
We're worth very little to them, aren't we. I mean,
would they do you think they'd pull out if we
said you have to you have to lend to every
petrol station, every dairy farmer, every mine that they would
throw their weight around.

Speaker 3 (01:40):
Absolutely. If the government starts telling the banks what they
have to do, then it is very much open to
the banks to say, actually it's too complicated. You're dictating
too much what we can and can't do. And therefore,
you know the reality is the Zellan market is not
that important to us. We're going to withdraw it, and
good luck to you in terms of getting the economy

(02:02):
operating without banks.

Speaker 1 (02:04):
Why isn't there a bank that turns up in a
situation like this and says, hey, I'll lend to those people.

Speaker 3 (02:11):
Well, I think that actually tells you about the desirability
of lending to them, because if there was a desirability
of leading to them, somebody would do just that. One
of the issues is that while this government appears to
be somewhat more in favor of fossil fuels and those
types of energy sources, we've seen just recently a government

(02:35):
that was trying to move away from that. And so
the risks that the bank's face if they get too
involved in providing lending and banking services to those types
of entities is that in three six years time, another
government comes in and says, actually we're going back to
what the labor government was doing in their last term.
We're going to move away from fossil fuels, and the
banks could end up with a lane duck customer and

(03:00):
considerable ross.

Speaker 1 (03:01):
Could the government regulate to say just on Kiev Bank
and say you have to take you know what you
have to be basically the orphanage for all those who
are rejected by the big banks.

Speaker 3 (03:13):
Absolutely, and to some extent that's one of the things
that Keevy Bank was talked about being not just for
businesses but for all sorts of customers. But again, you've
still got the risk that if in doing that, okay,
Kevy Bank may not move out of the country because
obviously they'll continue to operate, but there's a risk to
the government and that if it all turns to custom

(03:36):
that they're going to have to bail out Kivi Bank.
It's also the risk that well, not so much the risk,
but there's a question as to where the key bank
has the facility and the resources to be able to
actually take on many of those customers in the short term.

Speaker 1 (03:52):
The Prime Minister says that the banks are listening to
his rhetoric. Do you think they do pay attention? When
I mean the thing is it's not just to production
that's been Nichola Willis. Before that, it was just Cinda
Adourn and Chris Hipkins and anyone who's in power just
sort of bashes them with a big stick in the media,
almost as like a part of national cathartic pastime. Do

(04:14):
you think they care?

Speaker 3 (04:16):
Oh, absolutely, they care, and they pain in close attention
to what was being said and they will be considering
their response. So I'm confident that they are listening, that
they are taking notes, but their response may not be
the response that the government is looking for.

Speaker 1 (04:31):
Clear Matthew's banking expert MESSI University thinks, So much of
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