Seven foreign banks register

Press, 23 July 1987, Page 1

Seven foreign banks register

By

PETER LUKE,

political reporter

Eight new banks were registered yesterday, as part of the Government’s strategy to promote competition within the financial sector.

The registrations are unlikely to have any immediate dramatic effect, especially in the retail market, although the Government has hinted at greater competition in the home mortgage market

The Reserve Bank announced that one New Zealand and seven foreign institutions had become the first registrations under the Reserve Bank Amendment Act This was passed last December and came into effect on April 1. The act was designed to reduce differences in policy treatment between different types of institutions and to remove artificial constraints on institutions’ ability to decide their own investment strategies. The successful applicants (with the country of origin of the majority shareholder) were: NZI Financial Corporation, Ltd (New Zealand); Citibank NA (United States); Hong Kong and Shanghai Banking Corporation (Hong Kong); Barclays New. Zealand, Ltd (Britain); Macquarie Bank, Ltd (Australia); Broadbank Corporation (subsidiary of National Australia Bank, Ltd); Indosuez New Zealand, Ltd (France); and CISC New Zealand, Ltd (Canada).

A ninth application, still under consideration, is believed to be Main Corporation, Ltd. The Reserve Bank, however, struck a mere cautious note on the effects of the registrations, saying the major change would be an increase in the range and quality of services. More specialised services could be offered, and the new banks would also bring to New Zealand overseas skills.

The greater number of banks in ltoelf wbuldTdbt ?‘affect the suppty’of mortgage; finance, interest rates or monetary policy, the bankrsaid. ' 2 The bank has suggested that only one or two of the eight new banks will enter the retail market ■ : ,

Trustee banks will not be able to become registered until a bill converting them to company status has passed through Parliament. The way for building societies to register was cleared recently by the Building Society Amendment Act.

The principal benefit of registration is the ability for an institution to describe itself as a bank — there will frequently be little change in the activities of the institutions.

Mr Caygill recognised this yesterday when he suggested that the move merely recognised that the traditional boundary line between banks and other financial institutions had already become blurred.