Parliament’s banking inquiry hamstrung by short hearings

Wednesday, 6 November 2024

Parliament’s banking inquiry hearings are too short for MPs to get their questions answered.

ANALYSIS: MPs are finding their footing in Parliament’s banking inquiry, but it’s clear the hearings are too short for them to get answers to all their questions.

There was broad cross-party support for holding the inquiry, which grew out of the frustrations of farmers and the Government over lacklustre agriculture sector lending by the big four banks.

Farmers have grumbled about banks’ decarbonisation plans, their apparent desire to aggressively grow their city home loan businesses at the expense of rural lending, and the high price banks charge for farm loans.

But as the hearings have progressed, it has become apparent the scheduled hearings are far too short for them to get answers to all their questions.

On Wednesday, Rabobank chief executive Todd Charteris became the second CEO to face MPs’ questions, following ANZ’s Antonia Watson last month.

MP after MP found their lines of questioning cut short by time pressures in the 45-minute hearing.

ANZ chief executive Antonia Watson reiterated her claim at select committee that the bank did not make super profits.

Green MP Steve Abel responded with a “wow” when his line of questioning on banks’ climate strategies, and Rabobank’s parent bank’s massive fossil fuel investments, was curtailed.

Te Pāti Māori MP Rawiri Waititi embarked on a line of questioning on Rabobank’s lending to Māori that ran out of time.

National MP Nancy Lu didn’t get to the end of her questions.

Labour MP Arena Williams was so frustrated when she ran out of time with her questions seeking to probe whether some farmers were getting a raw deal from banks, she said she intended to write to Rabobank to put her questions to the bank.

“I have more questions for you,” she said.

The same short-time pressure was felt by MPs in the Primary Production select committee hearings in May that led to the banking inquiry happening.

Todd Charteris, chief executive of Rabobank New Zealand, at the bank’s head office in Unipon Square, Hamilton.

After one of the hearings came to an end, one off-camera MP opined: “That’s too short. That’s ridiculous,” after Federated Farmers had used up its 10-minute slot outlining the collapse in bank lending to the agricultural sector to the primary production select committee.

Rabobank, which is part of the giant Dutch bank of the same name, is an exception in rural lending among the banks, growing its market share aggressively, and retaining profits in New Zealand to reinvest in expanding its business here.

But Charteris assured MPs competition was strong in the sector, a claim MPs clearly remain sceptical of.

“There’s five strong banks in the sector. There’s no one dominant bank. Every bank is between 14% and 24% or 25% market share. I think it’s well distributed,” he said.

Rabobank also pushed back on being dubbed a “maverick” bank. That’s a term that’s come to be used about disruptive smaller banks taking market share off the big four banks, as Kiwibank has done in the household banking market.

Rabobank chairperson Chris Black told MPs: “To me, ‘maverick’ and banking sort of don’t correlate particularly well.”

MPs are also concerned that banks are overcharging some farmers, including by an over-emphasis on lending by overdraft, instead of term loans.

That was an issue first raised by Federate Farmers, which found 18% of farmers said their bank did not let them structure their debts in the most cost-effective way.

ACT MP Mark Cameron has shown distrust of banks’ decarbonisation agendas.

ACT MP Mark Cameron, himself a farmer, said farmers were concerned some bank lending practices were “predatory”.

“I think that banks are overtly forcing farmers especially to leverage what would be capital investments against their overdraft,” Cameron said to Charteris.

But, while Charteris denied Rabobank did that, his answer regarding the big four was only: “I can't comment on others.”

MPs also pushed on bank executive pay, and questioned Rabobank about how many executives were paid more than $1 million.

ANZ’s Antonia Watson was questioned on the same lines last month.

Charteris had a succinct answer on how many million dollar earners Rabobank had: None. But he answered in the affirmative to whether there was anyone paid between $500,000 and one million.

“One. That’s me,” he said.

MPs have shown a growing belief that farm loan rates may be too high, seeking to understand the contention of banks that they charge farmers so much more than they do on their urban home loans because farm lending is much riskier.

“In the last 10 years, we've appointed 16 receivers,” Charteris said under questioning.

Rabobank had called in receivers on a farm debt once in each year in of the past five years.

Watson said ANZ had had two receiverships in the past 10 years.

Charteris said Rabobank worked with under-stress borrowers to get them “back on track”, rather than pulling the plug on them.

He also said that the farm debt mediation scheme, mandated by law in 2019, had reduced the number.

That scheme was introduced after a bank lending scandal cast banks in a bad light in Wellington, where MPs lost confidence they were treating farmers fairly when they hit financial trouble in part caused by the loans banks had made to them.

Correction: An earlier version of this story suggested Charteris identified he was someone paid over a million dollars. In fact, he identified he was the one person paid between $500,000 and one million dollars. A correction has been made.