‘I just can’t do it’: Service station owners told bank debt must go by 2030

Wednesday, 11 December 2024

Banks including BNZ have told service stations their bank debt must be gone by 2030, as they strive to meet net-zero targets.

Petrol station owners and fuel retailer Waitomo say they have been refused new or increased lending by the big banks because funding them clashes with the banks’ net-zero commitments.

The Post has seen emails and internal policies from the BNZ in which the bank says all service station debt needs to be amortised out ‒ paid off ‒ by 2030 “or close to”. Petrol station owners say these communications have come “out of the blue” and left them feeling anxious about having to pay off their loans by 2030.

Fuel retailer Waitomo has previously told The Post the situation was well known in the market: “Put bluntly, because we sell hydrocarbons, the major banks are now debanking us.”

BNZ bank, which appeared before the Finance and Expenditure Committee this morning as part of the banking inquiry, denied the bank’s climate zero commitments prevented it from lending money to petrol stations.

Chief executive Dan Huggins said it was “really a credit decision for us”.

Asked about whether the petrol station owners had been asked to amortise their loans by 2030, again he said, “it’s very much about a credit decision”.

Later Huggins said thermal coal was the only industry the bank had decided to stop lending to, while others had more compliance put around them. But he confirmed that petrol stations were being asked to amortise their loans as the lending risk profile of the sector changes due to climate change.

It said in a statement to The Post it was “factually incorrect to state that any business lending decisions of this type at BNZ are connected to the Net Zero Banking Alliance.

“All business lending is determined on a case-by-case basis. Decisions are risk based, and a range of factors are considered, for example, the type of business, balance sheet strength, geographic location, and our market exposure.”

All New Zealand’s big banks are part of the Net Zero Banking Alliance, which committed to aligning lending, investment, and capital markets activities with net-zero greenhouse gas emissions by 2050. Under these new goals ‒ according to documentation The Post has seen and reports from those in the sector as well as Federated Farmers ‒ owner-operated service station businesses have been reclassified as “oil and gas customers”, and are therefore excluded from new or extended lending.

Owners of these businesses have spoken of their fear about not being able to pay back their business loans by 2030 to fit with the new rules, and the inability to get any new lending from banks to be able to grow, as well as anxiety about how much value their businesses will lose once they can no longer access bank funding.

All feared retribution from their banks for speaking to The Post, and asked to remain anonymous. But one was typical, owning several businesses across mainly rural and semi-rural parts of the country, and has significant debt with one of the big banks as he’s grown his business. He employs dozens of people.

He says the bank’s communications to him on this issue have come “out of the blue” and kept him up at night.

“For us, the first issue is that we can’t grow, because lending has been turned off to us,” he said.

One petrol station owner questioned what people, particularly in rural areas, would be able to buy after 2030 if not petrol.

“Because we are a petrol station and they have signed the Net Zero Banking Alliance pledge, they cannot give any lending or support to us … and on top of that they have said all our existing lending has to be paid back by 2030 due to their policies. And I just can’t do it,” he said.

“There are many jobs on the line as well.”

“As an owner operator, I can't even buy land and buildings on which a petrol station is operating, because of these rules. I have been denied lending, not because of the servicing requirements on the lending, but because we were a petrol station and we are going to be owner operated from that land.”

Another said he had spoken to others in the same situation and they were very concerned about the value of their businesses eroding. They also held fears for residents of small communities who may be denied the opportunity to buy petrol in small communities, without an obvious alternative at present.

“Banks have already closed down their branches in these small communities and they are losing services ‒ what is going to happen when they lose access to fuel as well?” he said.

Federated Farmers banking spokesperson Richard McIntyre said the move to sweep up petrol stations into the oil and gas value chain threatened their livelihoods.

While all big banks in New Zealand are signed up to the Net Zero Banking Alliance, the BNZ was the first to commit itself to the UN-convened global alliance. On signing, it said it would “accelerate a reduction in operational and attributable Greenhouse Gas (GHG) emissions across its lending and investment portfolios”

Westpac, for its part, said it continued to lend to existing service station customers as well as bringing on some new customers in recent months, saying it had no formal policy on reducing lending to the industry.

“But at the same time we recognise that demand for petrol is forecast to drop over the next 10 years and that is factored into credit decisions,” a spokesperson said.

Federated Farmers banking spokesperson Richard McIntyre said the move to sweep up petrol stations into the oil and gas value chain “completely threatens the viability of rural petrol stations, who are a vital lifeline for isolated areas.

“Rural communities are going to need to maintain access to essential services, like petrol stations, well beyond 2030. If those petrol stations can’t access capital, what are we going to do?

“Small town rural petrol stations are usually owned by local families, rather than big corporates. I know this is causing many of them a lot of unnecessary stress in the lead up to Christmas … BNZ are appearing before Parliament’s banking inquiry this morning and I hope they get asked some tough questions about their behaviour – because it’s totally indefensible.”

Federated Farmers is asking the Commerce Commission to look at anti-competitive behaviour by the banks all following the Net Zero Banking Alliance goals.

The agricultural sector is itself caught up in lending problems sparked by the banks’ net-zero strategies, covered extensively by The Post.

On Tuesday, Federated Farmers lodged a request with the Commerce Commission to examine these targets held by the big five banks in rural lending ‒ BNZ, ANZ, ASB, Westpac and Rabobank ‒ saying they “raise serious concerns about potential cartel-like behaviour and/or conduct that that could significantly lessen competition in the agricultural lending sector”.

The Government says it is pushing ahead with moves to increase banking competition by boosting Kiwibank with a capital raise.

“We’ve got a situation in New Zealand where five major banks dominate 97% of the agricultural lending market, and all five of those banks are affiliated with the Net-Zero Banking Alliance,” McIntyre said.

This raised some serious questions about the potential alignment of lending policies and anti-competitive cartel-like behaviour that “we think deserves further scrutiny”, he said.

“If farmers can’t meet those targets by 2030, what’s going to happen to us? Are we going to be treated like the petrol station owners and effectively be de-banked?

“We’re not saying there’s definitely cartel behaviour occurring. What we are saying is that it looks like there could be, and we’d like to see the Commerce Commission investigate.

“The old saying goes that if it looks like a duck, walks like a duck, and quacks like a duck – then it’s probably a duck. I think the same thing could be said about cartel-like behaviour.”