Should I switch from my two Aussie banks to put my money with a NZ bank?

Sunday, 16 November 2025

The big four Australian-owned banks pay about $5 billion in dividends to their Australian parent banks each year.

Senior business reporter Rob Stock answers your money questions. Got a question for Sunday magazine? Email it to sundaymagazine@stuff.co.nz

QUESTION: Should I switch from my two Aussie banks (Westpac and BNZ) to our NZ owned banks?

ANSWER: A fascinating question. I don’t know about your banking needs, and I am not regulated to give personalised advice, so the decision is yours. But there are probably big picture and little picture things to think about when making your decision.

Big picture first. The big four Australian-owned banks (ANZ, Westpac, ASB and BNZ) pay about $5 billion in dividends to their Australian parent banks each year.

Kent Dunston from the Banking Reform Coalition, which campaigns for banking reform, says this export of capital adds to New Zealand’s balance of payments deficit, and gradually makes us poorer.

Imagine, he says, if that $5b stayed in New Zealand, and circulated around, boosting local economies.

The profitability of the Australian-owned New Zealand banks is high. The big banks are low-risk operations that may make more, or less profit in a year, but the risk of a loss is so low it feels like only an apocalypse could bring it about.

Finance Minister Nicola Willis says listing Kiwibank could help raise capital — but any sale would need to preserve its Kiwi identity.

In the week I am writing this Westpac just posted a 13% increase in profit for a year in which the cost-of-living crisis tested households sorely, and kneecapped the Government’s popularity.

However, people harping on the capital export theme often miss the point that not all of those dividends end up benefiting Australians. Some of the shares in the Australian banks are owned by New Zealanders, and their KiwiSaver schemes. So New Zealanders do get some of the benefits of that $5b in dividends.

The other side of the big picture is that the big Australian banks are the biggest importers of capital. Currently, we rely on them for that. They are also the banks of big business, and the largest funders of small and medium-sized businesses, by a country mile. This makes them very important.

They also have higher credit ratings than all but one of the smaller, locally-owned banks, and so are more secure places to put your money than locally-owned banks. Kiwibank, however, has a higher credit rating from Fitch, because the ratings agency boffins see its government ownership carrying an implied taxpayer bail-out guarantee.

Credit ratings are less important to people since the introduction of the government-backed depositor compensation scheme, which exists to make sure we the little people are not left broke, should a bank go bust.

The little picture side of things is much more personal to you. You may be a farmer. You may own a business. You may be a salaried worker. You may be retired.

Who you are, where you live, and what you need from a bank, or banks, will be personal to you.

We do not yet have a PowerSwitch for banks, a wonderful AI-assisted tool that allows you to upload three months of bank statements and will tell you which bank you are better off at.

You mention having two banks. People often end up in this position because they have been shopping around for better deposit rates.

And these days, some people also have non-banks in their banking mix. Many people heading overseas on holiday get a Wise card, saving money on foreign exchange mark-ups when paying overseas.

Disclaimer: The information in this column is provided for general information only and is not intended as financial advice. If you require expert advice we encourage you to seek assistance from a professional adviser.