New Zealand bankers really are nicer than Australian bankers
Thursday, 8 August 2019
The New Zealand banking industry has been keen to claim Kiwi bankers were different to their scandal-rocked Australian parent banks; nicer, less aggressive, less prone to put profits before people.
The idea was greeted with scorn by some as Kiwi bankers like Sir Ralph Norris (CBA) and Ian Narev (CBA) have headed up Australian banks, and Australians like David Hisco (ANZ), Vittoria Shortt (ASB) and Angela Mentis (BNZ) have headed up New Zealand banks.
But the NAB/BNZ Files leaked by a whistleblower really do give some credence to the idea, even if it is only the case with one trans-Tasman parent-child banking duo.
National Australia Bank (NAB) hired McKinsey & Company to delve into the risk cultures at NAB and its New Zealand subsidiary BNZ, and in March 2017, it reported its findings to the bank.
**READ MORE:
* ANZ NZ employees' trust in senior leadership tested after Hisco scandal
* Banks make more money out of Kiwis than Australia
* Do Kiwi banks behave better than Australian banks?**
McKinsey & Company reported many NAB and BNZ bank employees weren't entirely complimentary about their employers.
Around a third saw their banks as sometimes failing to balance customers' best interests with the desire for profit.
And senior leaders in the NAB empire at the time were not seen as modelling the behaviours on risk that many lower-level bankers, such as tellers and branch staff, would expect of them.
'They (junior bankers) feel there is not enough role modelling of this behaviour from senior leaders,' McKinsey said.
The NAB risk culture, on many measures, was 'a little below' peer banks in the United Kingdom, United States, Canada, France, Italy and Russia, including on 'respect for risk', and 'adherence to rules', McKinsey said.
'There is room for improvement on all dimensions,' it reported.
There was an internal 'reluctance to disclose failures, mistakes and bad practices' within the bank, McKinsey found.
The findings were based on a survey open to 15,500 employees to answer, and over half did, including 1238 BNZ employees.
McKinsey reported: 'BNZ scores are stronger than NAB.'
BNZ staff were more cooperative than NAB bankers, showed a greater level of care, a greater tendency to challenge wrongdoing, greater levels of insight, and greater openness.
Throughout the report, there was a clear minority of people in NAB and BNZ who disagreed the bank was behaving well in certain areas.
Findings across all of NAB (not splitting out BNZ) included:
* 34 per cent disagreed (at least partially) that the people they worked with would 'challenge bad practices, even if it means triggering a confrontation'.
* 32 per cent disagreed (at least partially) that tensions between hitting targets and looking after customers' interests were managed appropriately.
* 31 per cent disagreed (at least partially) that their area of the bank had an 'accountability' culture rather than a 'blame' culture when mistakes occurred.
* 26 per cent felt at least partially 'stifled' when raising an issue that was important to customer wellbeing, or the banks' best interests.
Other parts of the NAB/BNZ Files also showed BNZ in a better light than NAB.
In April 2018, NAB was rated a warning 'red' on the internal executive dashboard for 'compliance' processes, and 'amber' for 'regulatory' risk processes.
By contrast BNZ scored 'amber' and 'green'.
Failures at NAB's wealth management, and superannuation divisions, were part of the cause.
BNZ also appeared to be a less aggressive mortgage lender than its parent.
An internal report from October 2017 showed BNZ had a much lower proportion of its home mortgages going bad than NAB.
NAB had experienced a high level of 'introducer fraud' in Australia, and relied on mortgage brokers for a large proportion of its business.
BNZ had pulled out of the mortgage broker market in 2003 and only returned to providing mortgages through brokers in mid-2015.
But even if Kiwi bankers are nicer and less aggressive than their Australian cousins, the Financial Markets Authority (FMA) and Reserve Bank are not convinced they have been treating the New Zealand public in the way it deserves.
The joint FMA/Reserve Bank conduct and culture review of the banks in late 2018 found banks were error-prone, slow to pay back customers they had overcharged, had under-invested in systems despite their huge profits, and needed to remove the incentives that encouraged bank staff to push products like loans, KiwiSaver and insurance to customers in a bid to meet sales targets set for them by their managers.
The banks have committed to responding, though perhaps not willingly, and ANZ's acting chief executive Antonia Watson indicated it was investing in the systems needed to better look after customers' interests.
THE OWNERS OF NEW ZEALAND BANKS:
The big four bank banks are all subsidiaries of Australian banks, though all four of those are listed on the Australian sharemarket, and KiwiSaver funds have large stakes in them.
* BNZ is owned by National Australia Bank
* ASB is owned by Commonwealth Bank of Australia
* ANZ is owned by the ANZ in Australia
* Westpac also shares a brand with its owner in Australia
* Kiwibank is co-owned by New Zealand Post taxpayers, ACC and the NZ Super fund.
* Co-operative Bank is owned by its customers
* TSB is owned by the TSB Community Trust, which owns it for the benefit of the people of Taranaki