What's so bad about Aussie banks, anyway?
Kiwibank drives me a bit nuts. I know it's not a great display of professional neutrality, but there's only so much gooey guilt-ridden advertising I can take.
They can certainly dance and jiggle. Their brand gets us emotional by projecting our heads on to caravans at pretty beaches and sternly asking, "It's mine, is it yours?"
They've got Nigel Latta digging into our money psychology and they want us to open an account because they're locally owned, whereas the evil Aussie banks take their profits offshore.
Aussie Aussie Aussie
It has all got a bit twisted for my liking. The Aussie banks distribute profits to shareholders just like every other company. I hold their shares in my portfolio and benefit. Anyone can. You probably do too as your KiwiSaver manager holds them on your behalf.
Kiwibank is owned by NZ Post, NZ Super and ACC, which is effectively "me-and- you". Right now they're asking me-and- you to cough up another $247 million in capital to deal with a little Reserve Bank problem they've got. That's double the $124 million profit they made last year.
This is all fully understandable. Kiwibank is at an entirely different development stage. They're still a young teenage money-pit and need good solid government shareholders to see them through the next decade of building a decent bank.
Oui, Oui, Oui
Sledging the Aussies has just got dull and laughable. It's time to grab some Ugg boots, a packet of TimTams and a copy of the KPMG Financial Institutions Performance Survey to add some balance.
The four big Aussie banks are ANZ, Westpac, BNZ (owned by NAB, National Australia Bank) and ASB (owned by CBA, Commonwealth Bank of Australia).
Profits: The big four made New Zealand based profits of $4.3 billion after tax in 2016. Buy their shares and you can personally have a slice of the dividends and capital gains or losses. Me-and- you earned the tax on those billions. Now that's worth dancing over. Kiwibank's tax bill barely induces a twitch.
Jobs: The Aussie banks employed 21,711 Kiwis in 2016 and paid $2.3 billion in wages to us. That's money we will spend in our own economy.
On average, each worker earned $107,000. Kiwibank employed 1410 of us with $122 million in wages, averaging $94,000 per worker.
Technology: ANZ bought us Apple Pay for our phones and Westpac came to market with Hostcard Emulation or tap-and-go. BNZ went with Google Android Pay and ASB have PayTag and Virtual for smartphones.
Meanwhile Kiwibank seem to be holding off on contactless phone payments and are digitising the Prezzy Card.
ATMs and Branches: When it comes to convenience Kiwibank rank top of the pops with 258 branches. ANZ run a close second at 215. But it's ATMs the Aussies are abundant with. The big four have 2196 holes in the wall with Kiwibank at 241.
Funds Management: The big four currently manage over $50 billion for us. ANZ has more than half with $26.5 billion. Kiwibank sit at $3.5 billion.
Foreign Exchange and Money Markets: If it weren't for the Aussies, where would we be? The kiwi dollar would certainly have pleurisy. There were 408,000 foreign exchange contracts written in 2016. All but a thousand of these originated from the Aussie banks. Interest rate forwards, swaps, futures and options paint the same picture – 2.3 million contracts, with 37,000 from Kiwibank.
Community Support: The Aussies are pretty generous. The sale of ASB to CBA generated an endowment that has now paid $745 million into the community over the last 30 years. ASB are also there for the Coastguard, St John and Starship. Westpac support the Rescue Helicopter, the Arts Foundation and a host of business awards. ANZ are behind the cricket, netball, Olympics and Field Days. BNZ help the Crusaders, Blues and Plunket.
Growing a Kiwi Bank
What should Kiwibank do? As the numbers show, it's not a game of tiddlywinks when you step on the field with the Aussies. Even Westpac have nicked Ritchie McCaw an an Ambassador.
Perhaps they just need to get on with being great bankers. Stop dancing, get out of the caravan and stake your reputation on your low fees and better rates rather than local ownership.
Way down the track "me-and- you" will decide we're not in the business of owning banks (a bit like airlines and power companies). The end game will be to sell up and reap the gains. An Aussie bank will step up and smile, just like ANZ with Post Bank. Or there might be a full or partial listing. Either way the great Aussie money wheels will keep turning.
Employ us, pay your taxes, innovate, give back and we'll love you regardless of where the ultimate ownership lies.
The numbers:
ANZ: 7655 staff, $894m wage bill, 666 ATMs, $1.5b profit
BNZ: 5019 staff, $476m wage bill, 479 ATMs, $913m profit
ASB: 4770 staff, $502m wage bill, 431 ATMs, $963m profit
Aussie totals: 21,711 staff, $2.3b wage bill, 2196 ATMs, $4.3b profit
Kiwibank: 1410 staff, $122m wage bill, 241 ATMs, $124m profit.
Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.