U.S. bankers look at N.Z.

Press, 2 December 1985, Page 42

U.S. bankers look at N.Z.

By

NEVIN TOPP

A delegation from the Independent Bankers’ Association of the United States is surprised that there have not-been large numbers of mortgagee sales and foreclosures in New Zealand because of the high interest rates.

One member of the delegation said that in Kansas 11 banks had had to close because of the pressure on the rural community caught between increased interest rates and a fall in farm incomes.

The bankers have toured Australia, and are visiting New Zealand as part of the people-to-people programme first started by President Eisenhower.

This professional group comes from the independent bankers in the United States who have one bank, or “unit,” compared with branch banking which is represented by corporations such as Chase Manhattan or Bank of America.

The leader of the delegation, Mr Bob Andren, a financial public affairs consultant from Spokane, Washington, said that the group could see the need for additional financial de-regula-tion in the United States after studying the moves made by the Australian and New Zealand Governments.

At present, state banks are not allowed to have branches in other states, “but it is inevitable, in my opinion, that we will be able to,” he sa% There waPalso no reason why foreign banks, such as the Bank of Tokyo or the ANZ, should not be able to trade in Spokane.

“The additional banks do nothing better than drive costs down, or it should if my academic background is correct,” he said. “Competition also breeds innovation and convenience to customers.”

However, the de-regula-tion of the banking system in Australia and New Zealand might not go as

smoothly for the established banks as they might expect. The chief executive officers of the Australian banks did not appear to be fully aware of what was likely to happen when the 16 or 17 new banks entered that market. “They have adopted this stoic attitiide of ‘we’ve already been able to compete and we will be able to compete.’ I wonder how much naivety there is in this view.”

But banking organisations such as Chase Manhattan or the Bank of America had the capital and were more sophisticated than their Australian counterparts. The marketing depart-

meats of the Australian banks appeared to be getting ready for competition from the foreign banks. This would come not only in the commercial sector, which was expected, but also in the retail market, he said. The established banks appeared to consider that the foreign banks would not be able to compete in the retail sector because it required “bricks and mortar” to set up such banks. But already a major foreign bank, possibly Chase Manhattan, has signed a deal with G. J. Coles, the big Australian department store group, which would give it just such access to “bricks and mortar,” Mr Andren said.

“The Bank of America is not going to come to Australia to lose money after it has had to put up $3O million in cash."

Except for Mr Andren, who is not an independent banker, all the members of the delegation are drawn from the Mid-West, extending from South Dakota to Texas. The size of the banks they run vary from bank deposits of SUS9M to less than SISOM.

Mr Andren said that the delegation had been “absolutely amazed” to see queues of people waiting to use automatic teller machines (ATMs) in Australia. This never occurred in the United States.

Electronic banking sys-

terns, such as ATMs, had not caught on in the United States. People there preferred the personal teller service.

“A machine can’t give you a safety deposit box or discuss with you what type of loan you require.” Another reason why ATMs were not favoured was that drive-in banking was common in the United States.

Part of the bankers’ visit to New Zealand included meeting New Zealand trading banking officials at a seminar held at the University of Canterbury’s Department of Extension Studies, Ham, and meeting officials of the Post Office Savings Bank in Wellington.