Commerce Commission dismisses Federated Farmers’ bank collusion claim

Commerce Commission says New Zealand's competition laws could accommodate for businesses collaborating on climate initiatives. Photo / Alan Gibson

The Commerce Commission has dismissed a complaint by Federated Farmers accusing banks of colluding by signing up to a United Nations climate initiative.

The farming lobby group alleged ANZ, ASB, BNZ, Westpac and Rabobank coordinated their agricultural lending policies to align with the strategies and targets of the global Net-Zero Banking Alliance.

It claimed banks’ commitments to reduce their exposures to high carbon-emitting sectors increased the cost and limited the availability of credit to farmers.

However, the commission’s investigation found no evidence the alliance prompted banks to engage in anti-competitive or cartel-like behaviour.

It said signatories to the alliance made their own, independent decisions.

Under the alliance, signatories make public their intentions to ensure the greenhouse gas emissions from their lending and investment portfolios align with net-zero pathways by 2050 or earlier. The alliance doesn’t give signatories targets. Rather, it gives them tools to help them reduce their emissions profiles.

The commission acknowledged banks weren’t the only businesses that worked together to develop and deliver sustainability initiatives.

It said New Zealand’s competition laws could accommodate such collaboration, noting the commission had released guidelines to help businesses do so.

The commission’s announcement comes as the Government considers making it illegal for banks to ditch customers on grounds that aren’t “commercial”.

The idea behind NZ First MP Andy Foster’s members’ bill is to prevent banks from walking away from customers that don’t meet banks’ environmental, social and governance policies.

The Financial Markets (Conduct of Institutions) Amendment (Duty to Provide Financial Services) Amendment Bill, known as the “woke bank bill”, passed its first reading in Parliament on May 21.

Parliament’s finance and expenditure committee is now considering public submissions on the bill.

Critics consider it to be unworkable virtue signalling. They make the point that every decision a bank makes is arguably commercial.

The Government exercising control over who businesses trade with could also create a chilling effect across the economy more broadly.

The finance and expenditure committee has been focused on banking issues for some time.

It has also been working with the primary production committee to investigate competition in the banking sector. It has heard public submissions on this and is soon due to deliver its final report on the inquiry.

Of the $15.5 billion of new bank loans written in May, 13% went to the agricultural sector, according to the latest Reserve Bank data.

Jenée Tibshraeny is the Herald‘s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.