Bank applicant

Press, 13 November 1985, Page 51

Bank applicant

By

Simon Louisson

in Wellington

NZI Finance Corporation, the merchant banking arm of NZI Corporation, will be a definite applicant for a banking licence. The general manager, Mr John Wells, confirmed the merchant bank will be applying for full banking status when the deregulated licence system comes into effect next year. But he says NZI Finance will not necessarily be operating in the retail market — it will probably concentrate on the wholesale and commercial sector of the market.

He says the prudential requirements announced by Mr Douglas earlier this week were exactly as expected.

“If we were writing the criteria ourselves we couldn’t have done it any better,” he says.

NZI Finance will have its head office in Auckland, which he considers will be an advantage in view of the fact that all banks at present have headquarters in

Wellington. He expects to capitalise on the fact that NZI is New Zealand owned, while the three current trading banks are overseas owned and so are a number of other prospective applicants.

Mr Wells does not believe the banking scene will be too overcrowded even if 30 banks are licensed. He says people said the same thing when the foreign exchange market was freed up but the competition had the effect of reducing margins from 1 per cent to 0.1 per cent. “There will be some rationalisation in the market and we will end up with a few large players dominating the mar-

He says the ownership of the cheque clearing system, Databank, by the four trading banks is not a barrier,: but just a pricing consideration. He says that cash clearing systems are heading towards electronic solutions such as EFT-POS.

Though the main practical advantage of becoming a bank is the ability to issue cheques he says the word “bank” still means an awful lot.

“That’s really the attraction. Bank in New Zealand means security.”