“We support a risk-based approach to setting levies where lower risk entities, such as banks, pay lower levies because they are less likely to call on the scheme.”
The deposit guarantee scheme announced today by the government will provide even more security for people who have bank deposits.
“Our banks are among the best capitalised and regulated in the world. We saw their strength and resilience through the global financial crisis, when there were no bank failures or bailouts in New Zealand. And, again recently, through the economic impact of Covid-19, where our banks were able to help affected households and businesses get through.
“New Zealand’s banks are a very reliable place to keep your money. Today’s announcement will provide depositors with an extra layer of security for their money in the unlikely event of a bank failure,” says New Zealand Bankers’ Association chief executive Roger Beaumont.
“A deposit guarantee scheme has been well signalled by the government. We look forward to working through the scheme’s detail.
“One issue that will need working through is how the levies to fund the scheme are applied to participating entities. We support a risk-based approach to setting levies where lower risk entities, such as banks, pay lower levies because they are less likely to call on the scheme.
“Another factor to take into account are higher minimum capital requirements to be phased in for banks. That comes at a high cost for banks and is intended to help our banks withstand a one-in-200-year shock.
“It will also be important to work through how the scheme fits in with the broader crisis management frameworks. That includes the Reserve Bank’s Open Bank Resolution policy, which can, among other things, draw on deposits to help keep a bank afloat in the case of a potential failure.
“We look forward to working with the government on the proposed legislation,” Beaumont says.
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“Some banks have individually made their own commercial decisions to phase out cheques. Some have announced dates for this, while at least one already does not accept or issue them. We’re not aware that any previously announced dates have changed.”
The six banks participating in the Regional Banking Hubs trial are renewing their commitment to not close regional branches until the end of the year, when the trial concludes.
The September 2019 announcement of the hubs pilot included a voluntary commitment to not close regional branches for the period of the trial. The full commitment was in place for 15 months but was suspended in January this year because of the significant impact of Covid-19 on customer behaviour and the hubs launch timeframe.
The renewed commitment is the same as before – it will not include branches within the city council boundaries of the six main urban centres of Auckland, Tauranga, Hamilton, Wellington, Christchurch and Dune din. It does not include already announced consultations and closures and only applies to the six banks (ANZ, ASB, BNZ, Kiwibank, TSB and Westpac). It does not include NZ Post/Kiwibank co-locations or earthquake strengthening, health and safety, or lease expiry.
Any commercial decisions about whether or not to close any branch that falls outside the commitment will be made solely by the relevant bank at its discretion.
The commitment comes into force today. It follows constructive discussions with the Minister of Finance’s office.
“The six banks are pleased with community interest in the trial, although it is too early to get a clear picture of the data,” says New Zealand Bankers’ Association chief executive Roger Beaumont.
“The banks are also listening to feedback and working on potential enhancements, such as cash floats for businesses.
“In the meantime, NZBA will explore the best framework for the hubs to be able to move ahead if the trial is successful.”
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ANZ, ASB, BNZ, Kiwibank, TSB and Westpac announced today they would honour an earlier commitment not to shut any regional offices until a pilot of four small-town banking hubs wraps up.
Reserve Bank of New Zealand
Ministry of Business, Innovation and Employment
The New Zealand Bankers’ Association says borrowers whose repayments were deferred due to the COVID-19 pandemic and are still struggling, may get an additional temporary payment deferral, have the term of the loan extended to reduce repayments, or be moved to interest-only repayments for a period.
New Zealand Bankers’ Association chief executive Roger Beaumont said: “Banks are working closely with the few affected customers who still need help to get back on track.”
The loan repayment deferral scheme introduced a year ago to help borrowers financially affected by the Covid-19 pandemic ends today.
The scheme allowed home and business loan repayments to be fully deferred temporarily. Deferrals were made possible by the Reserve Bank allowing these loans not to be viewed as in hardship. Credit reporting agencies also agreed that Covid-related deferred loans would not impact individual credit ratings.
The loan deferral scheme was introduced in March 2020 for six months and extended to 12 months in August 2020.
“We’re delighted with the scheme’s success. It made an important contribution to the wider story of how New Zealand as a whole managed the economic impact of the global pandemic in the last year,” says New Zealand Bankers’ Association chief executive Roger Beaumont.
In the last year over 66,000 household and business loans, with a total value of around $30 billion, were fully deferred. At the end of February there were around 3000 household and business loans still deferred, with a total value of around $1.1 billion. That represents a fraction of all household and business lending for banks, which totals around $480 billion. Those numbers have continued to decline through March.
“Banks are working closely with the few affected customers who still need help to get back on track. Assistance for these customers will be tailored to their individual circumstances.
“Options for customers in hardship may include a further temporary payments deferral, extending the term of the loan to reduce repayments, or moving to interest-only repayments for a while.”
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