ASB reviewing KiwiSaver investments linked to Gaza

Wednesday, 13 November 2024

ASB chairperson Therese Walsh and chief executive Vittoria Shortt speaking at at the Finance and Expenditure select committee banking inquiry.

ASB chief executive Vittoria Shortt told MPs holding a Parliamentary banking inquiry that the bank was “working through” its KiwiSaver investments in companies linked to the war in Gaza and Israeli settlements in occupied territories.

The bank has faced a campaign to encourage ASB Kiwibank savers to switch their retirement savings to other KiwiSaver schemes because the bank has money invested in companies like Motorola, whose services and products that are on the United Nation’s list of companies that support Israel’s settlements.

Last week, ASB temporarily closed several branches in Wellington, Auckland and Whakatāne when protesters from Justice for Palestine demonstrated outside them.

Responding to Green Party MP Riccardo Menéndez March, Shortt said: “We are working through our exclusion regime right now on that issue.”

She did not provide a time frame for a decision to be made.

Other KiwiSaver schemes like Simplicity and Westpac have made calls to sell out of some companies linked with Israeli settlements, and so has the government-owned NZ Super Fund.

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The banking inquiry, which follows a Commerce Commission bank market study, is being held with cross-party support, and 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.

At the hearing, Shortt and Walsh said there was strong competition in banking, and defended the bank’s 12.5% return on equity, saying it was reasonable, and enabled it to raise capital from overseas to lend to households and businesses.

But MPs were concerned there was a mismatch between the return the bank was getting, and the returns achieved by the businesses like farms the bank lent money to.

Labour MP Damien O’Connor asked whether ASB had such high expectations for return on equity of the farms it lent to.

West Coast MP Damien O’Connor felt ASB was making a high return on equity from farmers’ sweat.

“Who does the sweating to create the 12.5% return on equity?” the MP for West Coast Tasman asked.

MPs are suspicious that banks are overcharging farmers for their loans compared with home loan borrowers.

Shortt said losses on rural lending was higher than on urban home loans, however, MPs appeared unconvinced, especially as the bank had had only four farm receiverships on its loans in the past decade.

Some also do not believe it is the place of banks like ASB to set emissions reductions targets for farmers, but Shortt said the bank was supporting farmers to continue to provide high-quality sustainable products.

National MP for Hamilton East Ryan Hamilton challenged ASB, which made a profit of $1.4 billion in its last financial year, to spend some of its high profits by providing at-cost home loans to first home buyers.

Shortt told him she would take his idea to ASB’s product team.

National MP for Tutuki Catherine Wedd asked how many ASB executives were paid $1m or more, and how much Shortt was paid.

Walsh said there were eight ASB executives who were paid at that level, and that Shortt had been paid $5.2m in the past year.

But Walsh and Shortt used the opportunity to lobby for law changes it wants to see.

That included hurrying up on passing a consumer data right law, and establishing safe digital identities for New Zealanders.

Shortt is the third bank chief executive to speak at the inquiry after ANZ’s Antonia Watson, and Rabobank’s Todd Charteris.

In the coming weeks Westpac’s Catherine McGrath and BNZ’s Dan Huggins will appear at hearings.