By PAULA OLIVER
In a surprising departure from his usual philosophy, Act MP Stephen Franks last night called on the Government to prevent the sale of the National Bank to an Australian bank.
Franks, Act's associate commerce spokesman, said it was disturbing that laws across the Tasman stated that Australian depositors
must be paid first if an Australian bank collapsed.
New Zealand was already woefully exposed to Australia, but it would get worse if the National Bank went that way too, he said.
The National Bank, a prized asset of British bank Lloyds TSB, is up for sale for a price rumoured to be about $6 billion to $7 billion.
Apart from London-based HSBC, the frontrunners tipped to buy the bank are all Australian.
Franks said the Government should immediately intervene and state that no Australian bank would get a further look at the National Bank until the Australian Government either repealed the relevant part of its Banking Act, or extended it to cover New Zealand depositors equally.
His comments came a month after Reserve Bank Governor Alan Bollard expressed concern about the risks posed in having all of New Zealand's key banks Australian-owned.
One of the problematic areas is the many "back office" functions - such as payments clearing - that have been consolidated into the operations of Australian parent banks.
This has raised questions about whether a New Zealand subsidiary could function as a standalone bank if its parent failed.
Franks said that the Government had an opportunity to get the Australian law changed.
"Tell the Aussie banks 'transaction declined' until they give us some security," he told Finance Minister Michael Cullen.
The ANZ bank was the first to lodge an application with the Commerce Commission this week, but others are expected.
The commission must determine in what markets the ANZ and the National Bank will compete, and ask if there will be an effect of substantially lessening competition.
