Former Economics Editor of the NZ Herald

Reserve Bank boss rejects Green claims

Reserve Bank Governor Graeme Wheeler. Photo / Mark Mitchell
Reserve Bank Governor Graeme Wheeler. Photo / Mark Mitchell

Reserve Bank governor Graeme Wheeler has rejected claims by the Greens that he is biased in favour of the banks he has to regulate.

Greens co-leader Russel Norman has accused Wheeler of misleading Parliament, when he told the finance and expenditure select committee last month that when New Zealand banks' return on assets were compared with most OECD countries, "we are in fact about average or below".

The OECD includes European countries, many of whose banks are under some strain.

Among 16 advanced economies outside the euro area, New Zealand's banks rank fifth, between Australia and Canada, for return on assets, when returns are calculated before tax and extraordinaries, according to data which was still being compiled by the Reserve Bank when Wheeler appeared before the select committee.

"Our new governor's complacency about bank profitability is concerning," Norman said.

"His job is to regulate our banks, not be their champion."

Wheeler said the Reserve Bank took seriously its mandate from Parliament to supervise the New Zealand banking system, and it did so without favour.

"Profits in the New Zealand banking system reflect relatively low levels of non-performing loans, and low cost-to-income ratios, compared with many other countries,"he said. "Australasian-owned banks emerged in better shape from the global financial crisis because of their more conservative management, and our economies benefit from that strength."

- NZ Herald

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