A financial expert claims Australian banks are ripping off New Zealanders with higher banking fees, which ANZ Bank has strongly denied.
Australian-owned banks made around $5.2 billion over the last year in New Zealand, an "astronomical amount of money," says Sam Stubbs, managing director of Simplicity, a non-profit KiwiSaver plan.
"It's a rip-off, and we know that because the four Aussie banks are four of the 10 most profitable banks in the world," he said, referring to Australian-owned banks ASB, ANZ, BNZ, and Westpac.
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"We also know that all of those banks make more money out of a New Zealand household than they do out of an Australian household."
ANZ customers in New Zealand pay about 20-30 percent more in fees than Australians, Mr Stubbs told The AM Show. "I think we are a very profitable branch office," he said.
But ANZ told Newshub banks in New Zealand and Australia face different regulations and costs, so some fees will be higher and some lower in each country.
"In New Zealand, banks aren't allowed to rip people off with fees," a spokesperson said. "The law requires our fees to reflect the cost of providing the service."
"Every bank customer is different (ranging to a school pupil with $20 in a savings account, to customers with large and complex investments), so trying to estimate a cost to an average customer will be a vast oversimplification."
"Comparing the 'average' customer in one market to that in a different market is always going to paint an inaccurate picture. We're constantly reviewing our fees. This year we've removed or reduced 41 fees, including those to use ATMs."
"Also, unlike Australia, merchants in New Zealand don't get charged fees for Eftpos payments."
Mr Stubbs' criticisms came after ANZ announced on Wednesday it made a record $1.99 billion profit in New Zealand in the past year. It compares to profit of $390 million from Air New Zealand this year, and a loss of $190 million from Fletcher Building.
"This is super profitable - this is not normal profits," Ms Stubbs said of ANZ. "The banks in New Zealand are staffed by wonderful people, but they're operating within a horrible system which happens to make more money every year," he said.
Based on the $2 billion profit ANZ made, imagine you're waiting in the bank for one minute: The bank just made $3800. ANZ makes that much in a minute, which is more than half a million dollars in an hour - more than the profits of the eight biggest New Zealand power companies combined.
Where'd all the branches go?
Despite being such a profitable industry in New Zealand, Australian-owned banks have been closing branches in rural areas. Around 100 people protested ANZ's departure from Martinborough in September, leaving the tiny Wairarapa town without a branch from October 19.
"How do they cut costs? They've closed down branches all over the country," said Mr Stubbs. "Isn't it ironic that the most profitable industry in the country is actually walking away from rural New Zealand?"
ANZ defended these claims, telling Newshub transactions in branches have been "falling steadily for years, to the point where some branches have to close. We always do this reluctantly and after steps are taking to keep branches open."
The spokesperson said ANZ has about $13 billion in capital deployed in New Zealand, helping Kiwis get into homes and start and expand businesses.
Looking at Return On Equity - the return an investor gets for putting equity into ANZ - it's about 15 percent, the spokesperson said, which is "middle of the road profitability for a publicly listed company in New Zealand".
"Mr Stubbs isn't in a good position to criticise closure of branches because he doesn't have any branches," the spokesperson said.
"If he did, we're confident we would face the same changing customer preferences and business realities that the banks which collectively have more than 1000 branches throughout New Zealand do."
'Sucking' New Zealand's wealth
Mr Stubbs said it's time Kiwis became more aware of the money they're handing over to Australian banks. He said that would be bad news for them, because once people find out what they're paying, they might switch to another cheaper option, which could force prices down.
"Do you know what you paid your bank last year in fees? Nobody knows, right?" said Mr Stubbs. "It's interesting, isn't it? Because you know what you pay for power - you get that in a bill every month - but you don't get that from your bank."
He said banks could send their customers a bill each month, showing them exactly what they've been charged, but choose not to. "Ignorance and apathy are the friends of the banking system because they get to charge you a little bit more without you knowing."
The most frustrating aspect of ANZ's financial results, said Mr Stubbs, is the relatively low amount of money injected back into New Zealand. The bank gave $15 million, which is three quarters of 1 percent of profits, for sponsorship and charitable donations.
"The rest of that money went over to Aussie shareholders," he said. "You can almost hear the sucking sound of New Zealanders' wealth going back to Australia."
ANZ denies this, telling Newshub the bank pays dividends to its shareholders, whether they are in Australia, New Zealand or anywhere else in the world.
"This year we'll pay about 80 percent of our New Zealand profits to our shareholders," the spokesperson said. "In other years it's been less. Just after the Global Financial Crisis in 2008 our parent bank actually injected capital into our New Zealand operations."
"In New Zealand we have around 17,000 ANZ shareholders - including KiwiSaver funds - who in 2018 we paid $67 million in dividends to. ANZ also reinvests substantial amounts into the business in New Zealand, including around $100 million in digital banking in NZ."
Interestingly, Mr Stubbs' KiwiSaver funds invest in ANZ shares, so when ANZ performs well, his customers see the benefits.
"It seems disingenuous for him to criticise the very thing that is helping his mum-and-dad customers prepare for a better retirement," the spokesperson said.
ANZ New Zealand paid:
- NZ$760 million in corporate taxes (more than 5 percent of New Zealand's total corporate tax take);
- NZ$810 million in staff wages and salaries;
- NZ$540 million to local contractors and suppliers;
- NZ$15 million in sponsorships and charitable donations
Newshub.
