By RICHARD BRADDELL
A common currency with Australia will not happen soon, but it could take place within ten years, says the head of Westpac's institutional bank, David Willis.
One of three New Zealanders in Westpac's top executive team at its Sydney headquarters, Mr Willis said the common currency might seem the logical outcome, but only after several years and some small steps towards harmonisation of business and tax law between the countries.
"When you put all these pieces together, you are going to find that we are close in a number of ways and maybe the step to a single currency will not be that great," he said. "I'm in favour of it."
Mr Willis said Westpac had researched the common currency issue and had found it would be beneficial for small businesses.
"But they are only one of the interest groups and the practical realities of putting it in place are clearly substantial."
Among concerns was the loss of sovereignty implied in a common currency.
But while New Zealand would lose control of monetary policy, the two countries moved in tandem 70 per cent of the time and Australia's monetary policy already coped with large regional differences, for instance, between Western Australia and Queensland.
A small complicating factor could be that the New Zealand economy's direction, for the first time in a number of years, was diverging from Australia's.
Also unique was that it would outperform Australia's economy because of the impact of recent droughts and the severe flooding in highly productive rural areas of Queensland and New South Wales.
Conversely, New Zealand's weather had favoured agriculture in the past two years and the rural economy was booming with the help of the low kiwi.
Westpac Institutional Bank, the success story from several years of strategic development, was a large component in a $76 million surge in WestpacTrust's September year net profit to a New Zealand record $402 million.
And while WestpacTrust received a lowly score in last month's Auckland University customer satisfaction survey, its corporate banking service was highly rated by customers.
Mr Willis said that was because it had differentiated itself by ensuring that the primary responsibility for business processes remained in New Zealand with people who understood local business conditions.
Rather than being structured on product lines, the institutional bank had structured its business into segments with separate groups serving 13 different sectors.
For instance, it had a team focused on the healthcare sector with the people who handled relationships, research, risk and credit working together in the same group.
Mr Willis said segmentation around customer groups was difficult to achieve, but it resulted in greater knowledge of the particular market and customer needs.
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