P.M. threatens to trim Aust, banks trading in N.Z.

Press, 3 February 1981, Page 1

P.M. threatens to trim Aust, banks trading in N.Z.

PA Wellington : ; The Prime Minister, Mr Muldoon, has said that he will cut back Australia’s banking business in New Zealand if this country’s banks are not allowed to trade freely in Australia.? . , - /

The warning ■ issued in an interview with the “Australian” -printed in'. Canberra yesterday — throws a spanner in the : works of moves toward closer, economic relations with Australia.- ' The banking issue was one of "five or six” which had to ;be dealt with be- 4 fore closer economic relations "is going :to come together,” said Mr Mui. -

doon in x Wellington last evening?He told the “Australian” it was ’. "totally unacceptable” that Australian banks had been trading without restraint for 150 vears in New Zealand, while New Zealand banks were denied licences in Australia. He had maae represent tations to the Australian Government for more than two years, but .> there had

been no solution, even though’ Australia had a big slice, of the. New Zealand financial sector,, including banks, finance houses, and insurance.

The Australian Prime Minister (Mr Malcolm Fraser) had already been advised that continued restrictions in Australia on New Zealand banks could invite similar controls in New Zealand, Mr Muldoon was reported as saying. “That, would certainly include banks’ that had been trading in New Zealand for 150 years,” he said. , . Australian banks had continuing licences to trade in New Zealand and were accepted as vital parts of the community. "But I would very quickly make a restraint if I had to because there is no difficulty under our banking laws.” Australia had many finance houses trading in New Zealand — mainly subsidiaries of Australian banks — and also many fire and life insurance companies. But going the other way across the Tasman was difficult because Australia was protectionist, Mr Muldoon said. , "Australia is frightened of opening the floodgates and letting .’ European banks in if’ it allows New Zealand. “I am knocking bacß foreign banks which want to start up in New Zealand, including Citibank recently, but when I say no, I’m protecting the Wales and Commercial and the A.N.Z. as well as the Bank of New Zealand. “On that basis, we feel we should fairly be allowed access to Australia and that is our minimum 1 demand ion’ the issue," Mr Muldoon was quoted as saying. Mr Muldoon and. Mr Fraser are due to meet again next month to discuss closer economic relations. . He said last evening that banking would be one of the crunch issues Mr Muldoon said one New Zealand proposal after another to go into the Australian financial sector had been frustrated. One company, he thought .it was Marac, wanted to take over a company in Australia and was told it could not have more than 50 per cent of the shares. At' the same time the Australian Stock Exchange was saying that the company could hot get Stock Association approval unless the company bought all the shares that were offered. . ?■? Mr Muldoon said the B.N.Zivhadi four branches in Australia and the extent to,whichit wanted to expand was limited. It'had expanded “somewhat, but When it wanted •• to buy ■ a finance company —• something that Australian banks have in New Zealand — no, the restrictions were such that it could not do it,” he said.

Mr Muldoon was reported as saying the Bank of New Zealand had not been given permission to expand in Australia, nor had the New Zealand Insurance company been able to buy into financial houses in. Australia.