Tamsyn Parker

Money Editor for NZ Herald

Power banking on change

The formerly upwardly mobile Cabinet minister is now having to follow regulations he was in charge of setting.

Former Commerce Minister Simon Power, now head of private wealth at Westpac Bank, is throwing himself into his new job with gusto. Photo / Dean Purcell
Former Commerce Minister Simon Power, now head of private wealth at Westpac Bank, is throwing himself into his new job with gusto. Photo / Dean Purcell

When Simon Power announced his resignation from politics in March last year it surprised many who had believed he was in line to be a future Prime Minister.

But the former MP, who joined Westpac Bank in January to head up its Private Banking arm, says he knew as far back as 2005 how long he intended to stay.

"I knew when I was going."

Power only planned to be in Parliament for one term. That, he says, is one of the reasons he pushed so hard to get everything done quickly.

But then you get the impression that Simon Power doesn't do anything slowly.

"Steady is dead," he quips.

Power has been with Westpac less than a year and already he has been promoted, taking over the insurance and KiwiSaver division in July after the departure of boss David McLean.

One of the advantages of moving to the corporate world has been reclaiming his weekends.

Power still claims to work 14- to 17- hour days but now restricts it to weekdays. The spare time has allowed him to get involved with his children's sport.

Power says one of the big differences in moving to Westpac has been getting used to the change in culture.

"In politics people's motivations can be mixed - here everyone is very supportive."

But regardless of the support he says the move back into the corporate world has not been a piece of cake.

"Some of the skills are definitely transferable." Making decisions for a country has some similarities with running a big business like a bank.

"But intellectually the challenges are different."

He has to think differently about risks, pricing and regulations.

In what Power calls his "past life" he was in charge of setting the regulations - now he must follow them.

One of Power's big stamps on the finance industry was the formation of the super regulator, the Financial Markets Authority in 2010.

He says the policy direction and ideas was 95 per cent on the money.

"The direction was right. The truth is globally, if we hadn't moved in that direction, we would be an outlier."

Power says the FMA has a very different culture to its predecessor the Securities Commission which was heavily criticised for its ambulance at the bottom of the cliff approach.

Power says Westpac takes its regulatory responsibility very seriously.

"Part of banking is that it has a lot of regulatory facing activities."

Westpac's private wealth customers are also a very discerning bunch - particularly in the current difficult global environment.

He says the biggest challenge for the banks in the past few years has been the global environment - something largely out of their hands.

The challenges haven't stopped Westpac New Zealand and rivals ASB and ANZ from declaring record profits this year - a fact which has riled Power's former political rival Green Party co-leader Russel Norman.

But Power scoffs at any suggestion banks are ripping off their customers.

He points to recent research commissioned from Massey University by the Bankers Association showing New Zealand bank returns on equity are in the middle of the range compared to top 50 NZX listed companies valued over $100 million in the last five years.

The Reserve Bank also produced research this week showing New Zealand's bank returns on equity and assets appear to be in line with other developed countries.

Power said the flipside to the argument was that New Zealand banks had also provided a lot of stability during the global financial crisis.

"Westpac is a big contributor to the wider economy." It employs a lot of staff and pays a lot taxes.

Power says Westpac also contributes to New Zealand outside of its commercial capacity.

"That means a lot to me and is one of the reasons I enjoy working here."

One thing he is proud of achieving this year was breaking the insurance deadlock in Christchurch.

Power claims Westpac was the first to start offering insurance again with the others following soon after.

Power says his next big challenge will be the introduction of new anti-money laundering rules in July.

Ironically it's a law change he oversaw in his last job.

"It is a big piece of work, it's going to require substantial changes."

But he shrugs off any suggestion of it being a regulatory burden.

"It's just part of the business of being in the financial services industry."

So does he miss politics at all?

"I loved every minute of the time I was in politics, I think I made the most of every moment. But I am loving what I am doing now."

As well as moving into the commercial world it's the first time Power has lived in Auckland with his family.

He likes working five minutes from the harbour and that he can choose from a number of beaches to visit on the weekend.

He may even be convinced to switch his support to the Blues now Sir John Kirwan is in charge.


Simon Power

*Head of private wealth and insurance at Westpac Bank New Zealand.

*Former Minister of Commerce and Minister of Justice for the National led-Government.

*Bachelor of Arts degree in political science and Bachelor of Laws degree from Victoria University in Wellington.

*43 years old.

*Married with two children


Making financial literacy a priority

Another area in which Westpac has moved outside its direct commercial bounds has been in a partnership with Massey University to back its Financial Education and Research Centre.

Financial literacy is a hot topic for Simon Power. "It's not just governments that solve these problems; commercial organisations have a role to play in the debate too."

The centre recently revealed research from a 20-year longitudinal study, which found that 77 per cent of 18 to 22-year-olds did not think it was important to plan their finances more than four years ahead.

"I was quite taken aback by that," says Power. However, he laughs when asked if he planned five years ahead when he was 18.

The research found 66 per cent of young people learned their financial habits from their parents.

Power says banks have a role to play in teaching people better ways of looking after their money. "That is good for them and good for us."

Westpac is in the process of thinking about how to shape its business in order to provide a whole suite of services that will be cross-generational, Power says.

One part of that is KiwiSaver. Despite missing out on default status, Westpac has become one of the largest providers in the country.

The default system is under review with the contracts for default providers up for renewal in 2014.

Power admits Westpac would apply for default status if the opportunity arose but says that may not happen.

But he is pleased the industry has developed to a point where debate has opened up around the KiwiSaver model.

"KiwiSaver is a big part of the savings culture in New Zealand. People are starting to see significant amounts in their accounts."

Going hand in hand with KiwiSaver is the debate around increasing the retirement age.

Power says the bank doesn't have a view on whether the retirement age should rise but would actively participate if any policy settings were reviewed.

"It's not an issue that is going to go away in a hurry."

- NZ Herald

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