Archive for the 'Reserve Bank' Category

Unemployed present human face to bankers

Unemployed workers in Wellington did a tour of banks – the Reserve Bank, Westpac, ANZ and BNZ to show the human side of unemployment.

After a BNZ economist said that unemployment was ‘artificially low’, unemployed people wanted to send a message that job loss was devastating for families and communities – and more than a statistic.

Finsec General Secretary Andrew Casidy said that banks needed to show an interest in employment. “They can show this through their own employment practices, by investing in jobs when their profits are rising and not sending jobs offshore. They can also show this to their customers with fair interest rates.”

“The banks need to recognise the human cost of unemployment,” said Casidy.

Reserve Bank staff settle for 2%

Finsec members at the Reserve Bank voted this week to ratify a collective agreement featuring a 2% pay increase and a one year term.

While this was a big improvement on the employer’s initial offer of 1.25%, the deal reflects the Reserve Bank’s pay philosophy of taking a modest approach which cannot be seen to be ‘leading’ pay rise expectations in either the private or public sector.

Government and Reserve Bank can stop ANZ National offshoring in national interest

Finsec is calling on the Reserve Bank to step in and prevent ANZ National from sending 500 jobs and key bank functions to India and for the Government to support such a move.

“The Reserve Bank can protect New Zealand jobs. We are calling on the Reserve Bank to use all mechanisms it currently has and develop more if needed to stop this unnecessary attack on New Zealand workers and bank customers,” said Finsec Campaigns Director Andrew Campbell.

“The Reserve Bank can and should protect New Zealand bank customers from the risk posed by the proposal. If there is any failure of the operation in Bangalore, the impact on the bank’s ability to operate, ensure customer’s access to funds and meet their other requirements could all be in question,” said Campbell.

In addition Finsec is calling for a change to Reserve Bank outsourcing policy by introducing a national interest provision, as the Government has done to the Overseas Investment Act. Campbell said the stability of our banking system is of huge strategic importance to New Zealand and needs to protected.

OCR held, Finsec in the news on interest rates

Finsec is calling on communities to hold banks to greater account for their interest rate increases, in the wake of the Reserve Bank decision to leave the Official Cash Rate (OCR) unchanged at 8.25 percent. 

Finsec Campaigns Director Andrew Campbell said that the banking sector now needed to be even more mindful of public concern about their recent interest rate grabs. “New Zealanders are demanding more of our richest and biggest corporate citizens. The Reserve Bank decision makes the latest round of interest rate rises even more difficult to explain and they are out of touch with public policy and popular opinion.”

 Finsec has been able to bring a level of public debate to last week’s ANZ National’s interest rate increases through extensive media coverage, including the two TV3 stories linked below: 

http://www.tv3.co.nz/Video/Unionurgesbanktojustifyincreaseininterestrate/tabid/369/articleID/47664/cat/52/Default.aspx

http://www.tv3.co.nz/VideoBrowseAll/BusinessVideo/tabid/369/articleID/47714/cat/167/Default.aspx

Reserve Bank gives credence to Finsec concerns about debt

Economics DogThe Reserve Bank has just released its 2007 Annual Report which notes that New Zealand’s financial systems and banks are generally in good nick.  However it also takes time to highlight similar risks to the New Zealand economy that Finsec has been discussing in recent years: the possible negative impact on the economy of banks continuing to focus on raising household debt rather than improving savings and customer service, and the negative impact that foreign owned banks are having on our current account deficit by not reinvesting enough back into New Zealand’s local communities.

“New Zealand’s current account deficit continues to grow, fanned by domestic savings-investment imbalances and high levels of household debt. Much of the debt has been funnelled into the housing market, putting upward pressure on house prices. Part of the growth in mortgage debt has involved some banks offering new mortgages that require little or no borrower deposit (high loan-to-value loans). Some households’ ability to service this debt has continued to deteriorate.” (p27)

 “Record levels of household debt, combined with stretched house prices, leaves the New Zealand economy and its banking system relatively more exposed to negative economic shocks. Slower economic growth would put more strain on household debt servicing obligations… Large and persistent saving and investment imbalances raise the possibility of a disorderly correction in foreign exchange and capital markets.” (p30)

(thanks to Collinson for the photo)

New Zealand, the branch economy

Small branch economy Brian Gaynor at the Herald has an interesting column on foreign ownership this week. The BNZ figures prominently in the story as a case study in how not to bring foreign investment into the country.

Gaynor also quotes John Stewart, CEO National Australia Bank (which now owns the BNZ), who recently told the Australian Financial Review that the Australian Government shouldn’t allow foreign takeovers of the four main banks because;

“Australia might end up as a branch economy, not dissimilar to the way New Zealand is now.”

It raises some interesting questions if the CEO of an Australian company that owns a major and significant New Zealand business does not want his Australian company to end up like his New Zealand one; How much does he care about that New Zealand company and what is he doing to address his concerns?

While it would be nice for New Zealand to own its on major strategic banks, that horse may well have bolted. It’s helpful to remember though that foreign investors are guests here using our resources and workers to turn a profit – much of which they often take back overseas with them. Foreign investors have a valuable role to play in our economy, but they need to go about it responsibly making sure that kiwis benefit from the exchange too.

For Finsec this raises two issues. The first is whether the Reserve Bank needs to improve its provisions in relation to purchase and sale of banks by including stronger national interest considerations. The second issue is that important economic banking decisions are now made in Sydney not Auckland. These include decisions not just about the working conditions and well being of bank workers, but also about important Better Banks issues like the the quality of customer service, investment back in local communities and bank’s responsibilities to the country is which they do business. What does this mean for the kind of union that Finsec needs to be to influence these decisions?

(thanks to wonderferret for the photo and a hat-tip to frogblog)

Overseas debt grows as banks continue to lend and borrow

debt fortune cookieThe major banks’ pressure to sell lending products to New Zealanders (and fund it with overseas borrowing) continues to manifest itself in our growing overseas debt. Statistics New Zealand now refers to bank lending and profits by large foreign owned companies as significant contributors to our financial situation and, in his comments on the statistics, the Minister of Finance does likewise. This month the Reserve Bank had to intervene in New Zealand’s foreign exchange market for the first time since 1985.

It seems that no matter how well the rest of the economy performs it cannot keep up with a foreign-owned financial sector determined to lend and grow. As long as New Zealand continues to borrow more than it earns our economy will remain at risk, particularly as our dollar continues to rise and threaten our export led economy.

Part of the problem probably with New Zealanders’ spend and borrow culture and part probably lies with government policy. But we believe that at the centre of the issue is the pressure banks continue to place on their staff to make the sale and increase profits beyond sustainable limits. If banks expect to make 10 percent or more increases in profit each year, which they currently seem to do, then simply and crudely put that means 10% more lending each year.

(thanks to idiolector for the photo)


You can contact us at:

0800 FINSEC (0800 346 732)
union@finsec.org.nz
www.finsec.org.nz


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