Jenny Ruth's Just the Business

Jenny Ruth's Just the Business

Share this post

Jenny Ruth's Just the Business
Jenny Ruth's Just the Business
Did RBNZ governor Adrian Orr mislead parliament again?

Did RBNZ governor Adrian Orr mislead parliament again?

Jenny Ruth's Just the Business's avatar
Jenny Ruth's Just the Business
Dec 05, 2024
∙ Paid
5

Share this post

Jenny Ruth's Just the Business
Jenny Ruth's Just the Business
Did RBNZ governor Adrian Orr mislead parliament again?
1
Share

Labour MP Barbara Edmonds asked RBNZ for “specific factors and historical data.” Source: NZ Labour Party.

For well over a decade, the Reserve Bank provided the big four Australian-owned banks with a grossly unfair competitive advantage by requiring them to hold vastly less capital against equivalent loans.

A few years back, while it was still finalising its new capital requirement rules, RBNZ gave us an inkling of just how big that advantage has been.

The government-owned Kiwibank had to hold nearly twice as much capital against a vanilla home loan as ANZ Bank New Zealand, our largest bank, had to.

Why this matters is that capital levels have a significant impact on the level of a bank's profitability.

The more capital a bank has does make it safer and less likely to collapse in a crisis, but that also reduces its profitability.

This post is for paid subscribers

Already a paid subscriber? Sign in
© 2025 Jenny Ruth
Privacy ∙ Terms ∙ Collection notice
Start writingGet the app
Substack is the home for great culture

Share