Deputy Prime Minister Winston Peters wants the big four Aussie banks to slash the dividends they pay to their investors so Kiwi consumers don't take a hit from the new bank capital rules.
Although saying the big four banks made "very good profits", Finance Minister Grant Robertson stopped short of echoing Peters' calls.
The comments come after the Reserve Bank today revealed its final decisions in regard to bank capital requirements.
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The decision means the major banks will need to find an extra $20 billion over seven years to cover the increased capital requirements, which will be progressively hiked from 10 per cent, to 18 per cent.
The banking industry has warned the move would have an "economic impact" on New Zealand.
National's finance spokesman Paul Goldsmith said the Reserve Bank's decision would add more pressure on an already slowing economy.
According to Reserve Bank documents, the new capital requirements could add around $5 a fortnight to the repayment costs of a $100,000 loan.
Peters said the banks' investors should weather that cost, so mortgagees don't have to pay more.
He suggested banks cut the dividends they paid their investors.
"The fact is, if they take a bit of a cut in extraordinary profits which they do have, and have had over all these years, they can well handle this matter."
Asked if banks should slash dividends to cover the expected added cost, Robertson did not directly answer.
"New Zealand's banks, particularly the four Australian owned ones, are extremely profitable; they do very well here.
"The point being that that means they're in a position to be able to deal with fundamentally is about making sure that New Zealander's money is safe in the bank."
He challenged Goldsmith's claims that the moves would hit economic growth.
"The Reserve Bank has a belief that this would support GDP growth because of the stability it means in terms of how banks would react in a crisis."
Meanwhile, Federated Farmers has urged banks to absorb as much of the additional costs as possible – rather than dump it all on customers and especially on under-pressure farmers.
The lobby group's commerce spokesperson Andrew Hoggard said the changes are likely to have a more adverse impact on farmers because of the tight lending market in the agricultural space.
But Robertson said he did not believe there was any justification in what has been proposed for there to be a blow to rural communities.