March 7th 2009


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Articles from this issue:

EDITORIAL: Behind Malcolm Turnbull's pitch for green votes

CANBERRA OBSERVED: The Costello question that refuses to go away

ECONOMIC AFFAIRS: China's spending spree: our sovereignty at risk

GLOBAL FINANCIAL CRISIS: Targeted spending needed to promote Australian jobs

NEW ZEALAND: Kiwibank goes from strength to strength

QUEENSLAND: Premier Bligh calls snap election

PUBLIC ACCOUNTABILITY: Shooting the messenger undermines democracy

HEALTH: Labor's campaign against doctors' private practices

UNITED STATES: The nightmarish cabinet of President Obama

FOREIGN AFFAIRS: UN whitewash of China human rights abuses

GLOBAL WAR ON TERRORISM: What to do with Guantánamo detainees?

SPECIAL FEATURE: The agnostic who took on Darwin and Dawkins

MARRIAGE AND FAMILY: Sexual suicide of Western society

AS THE WORLD TURNS: Social websites harm children's brains - top neuroscientist / Conspiracy theory? / 'Right to die' can become a 'duty to die'

Euthanasia and dementia sufferers (letter)

Wilson Tuckey I (letter)

Wilson Tuckey II (letter)

CINEMA: Stylised miniature of feminist mythology - Revolutionary Road

BOOKS: ATTILA THE HUN: Barbarian Terror and the Fall of the Roman Empire, by Christopher Kelly

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NEW ZEALAND:
Kiwibank goes from strength to strength


by Peter Westmore

News Weekly, March 7, 2009
Kiwibank, the New Zealand people's bank which operates out of New Zealand post offices, is a model of sound banking practice worthy of emulation in Australia. Peter Westmore reports.

Kiwibank, the New Zealand people's bank which operates out of New Zealand post offices, continues to expand through a combination of attractive bank practices and - let's face it - a strong dose of New Zealand patriotism.

The bank was established under the auspices of New Zealand Post in 2002, in part due to widespread concerns that New Zealand's banking system had fallen into foreign (in fact, Australian) hands.

Since then, Kiwibank has grown to have the largest network of branches in New Zealand, with around 600,000 customers, and is increasing at a rate of 100,000 a year, the same rate at which it attracted customers in its first year of operation.

Kiwibank was the first to set up internet banking in New Zealand, and in a variety of ways provides strong competition with the other major banks. It offers home loans at attractive rates (currently 6.49 per cent variable), as well as personal loans and business banking.

Patriotic

The bank's website makes it clear that having a Kiwibank account is the patriotic thing to do. Its home page points you to a page headed, "Story of the resistance", which says, "The movement began in 2002 - a little Kiwi-owned bank taking on the Aussie banks.

"New Zealand needed a better banking alternative - a bank that would provide real value for money, that had Kiwi values at heart, and that would keep your money where it belongs - right here, in New Zealand.

"And so the resistance was forged. Kiwibank was set up in PostShops throughout the country, putting us in more locations than any other bank in New Zealand.

"The resistance to foreign bank ownership grows stronger every day. More than 600,000 customers have joined the movement so far, with 300 more signing up every day.

"We have more than 800 Kiwibank staff around the country and a nationwide ATM network. We're in more than 300 PostShops, which means we can stay open longer than other banks, even on weekends in most places."

Even its media releases have a gentle dig at the foreign-owned banks. They appear on a letterhead under the words, "Kiwibank: its ours".

Kiwibank's message has not stopped the bank from having a special fund-raiser for the victims of the recent Australian bushfires.

Its website also lists all the bank's media releases back to February 2002, which allows one to look back on the bank's financial performance.

Kiwibank made its maiden profit on schedule in 2004-5, when it posted a $NZ7 million profit.

In the following year, that more than doubled to nearly $NZ16 million. In 2006-7, the profit rose to $NZ25.5 million, and last year, nearly $NZ37 million, although new accounting methods meant that this result was not comparable with those in previous years.

Although the bank was established by the former Labour Party Government, at the initiative of a former Labour Party leader Jim Anderton, the Government wisely appointed the former National Party Prime Minister, Jim Bolger, as chairman of Kiwibank, and Sam Knowles, a former senior bank executive with both the Bank of New Zealand and the bank's Australian parent company, the National Australia Bank, as CEO.

The bank has also responded quickly to the emerging financial crisis.Last September, it raised an additional $NZ60 million through a bond issue, and the fund-raising was heavily oversubscribed.

It joined the government guarantee of bank deposits, and has passed on to its customers each cut in the official cash rate set by the Reserve Bank of New Zealand.

Despite its undoubted success, Kiwibank has been criticised by some New Zealanders, particularly the free market ACT Party, which is now in coalition with the National Party Government.

Several district councils recently announced that they had been negotiating with Kiwibank to set up community banks on council premises, on the model established by the Bendigo Bank in Australia.

Bendigo launched community banks in Victoria 10 years ago following complaints that the big four banks were shutting down numerous branches and concentrating on corporate banking. There are 212 community banks in Australia, some of which return $100,000 a year to communities.

However, Kiwibank's move into community banking was strongly criticised by Rodney Hide, the president of the ACT Party, who is also New Zealand's Local Government Minister.

Mr Hide said, "People pay their rates to have their rubbish picked up and decent footpaths, not to invest in banks. Right now right around the world everyone is getting out of banks and here you have our city councils using ratepayers' money to invest in them. I'd like to know what this is going to cost, and what the ratepayers think of it."

By all accounts, most ratepayers are happy with the idea.

Kiwibank's success - based on patriotism, a cheeky sense of humour and good service - is equally relevant in Australia.

- Peter Westmore




























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