Kiwibank called on to get competitive

The Manufacturers and Exporters Association wants state-owned Kiwibank to step up competition in the business banking sector after its members expressed "clear and deep dissatisfaction" with the major banks.

A survey of the association's members found 86 per cent supported the parliamentary inquiry into banking practices which was this week blocked by National, Act and Maori Party MPs on the finance and expenditure committee.

Most of those surveyed also reported their banks had increased margins and charges associated with their credit facilities and tightened borrowing terms and conditions.

Association chief executive John Walley said the results "show clear and deep dissatisfaction with the banks; not universal but very strong".

Finance and expenditure committee chairman and National MP Craig Foss this week said the decision to not proceed with an inquiry was made after more information from the Reserve Bank.

Walley said the committee's attitude appeared to be that the Reserve Bank should be left to look after interest rates, but the issues were "far more complex than looking at the gap between the official cash rate and retail interest rates". Monetary policy and tax settings "lie at the very heart of the economic crisis" and part of the discussion "should involve a debate on the role that Kiwibank might play in driving competition in the mainly foreign-owned banking sector".